Net Profit falls 59% y-o-y to $12.6 million due to the non-recurring provision
Aramex has announced its financial results for the third quarter ended 30 September 2020.
Aramex’s Q3 2020 Revenue increased by 19% to $410 million, compared to $346 million in Q3 2019.
Top line rose across most of the Company’s business lines, with International Express rebounding from the previous quarter as global business activities have generally started to pick up with Covid-19 related lockdowns, mobility restrictions and border closures easing over the three-month period.
Revenue for the nine-month period ending 30 September 2020 increased by 7% to $1099 million, compared to $1029 million in the corresponding period of 2019.
Net profit fell by 59% to $12.6 million in Q3 2020, compared to $31 million in the corresponding period of 2019.
Excluding the previously announced non-recurring provision booked during the period because of the damages caused by two major incidents, namely Lebanon’s blast and the warehouse fire in Morocco, Net Profit would have been down by only 13% year-on-year to $26.9 million.
Net Profit for the nine-month period decreased by 40% to $56.6 million compared to $94 million in the prior year period.
More generally, to enable the Company to manage a robust increase in volumes, costs related to scaling operations rose over the period.
Additionally, some cross-border costs including line haul rates remain high relative to their historical averages. Those costs have been pushed higher since the beginning of the Covid-19 pandemic.
Bashar Obeid, Chief Executive Officer of Aramex, said: “We witnessed a very strong set of results over the three-month period, achieving the highest Q3 revenue on record supported by growth across most of our business lines.
"Covid-19 has accelerated growth in the e-commerce industry, which remains the dominant driver of our top line growth. We also managed to capture new opportunities from other industries, namely healthcare and pharmaceutical as well as retail and food and beverage.
"This has enabled us to further diversify our revenue mix, which is a core part of our commercial strategy to ensure we continue to grow sustainably through various market cycles.
"However, Covid-19 has also increased our overall operating costs across multiple parts of our business including costs related to scaling last mile operations and cross border transportation.
"While we believe the operating capital that has been deployed to expand our last mile capacity will normalize in the coming quarters, relatively higher line haul costs are here to stay for the foreseeable future."
Othman Aljeda, Regional CEO for Aramex in Europe, North America and Asia, added: “We experienced an exceptional 35% growth in total volumes over the period, with the majority of the contribution coming from our core markets including Saudi Arabia and UAE.
"Over the period we continued investing in our last mile infrastructure to support the strong growth in e-commerce activities including hiring more couriers, increasing our fleet, expanding our warehouse capacity and upgrading our clearance gateway capabilities.
"We also invested in several IT solutions to help automate and digitize certain processes. These investments are crucial to ensuring we are in a stronger position to efficiently handle current and future higher volumes and improve our level of service to customers.”
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