Aramex Reports Resilient Performance in the First Half of 2023, Despite Challenging Market Conditions

Aramex (DFM: ARMX) a leading global provider of comprehensive logistics and transportation solutions, announced its financial results for the second quarter (“Q2”) and first half (“H1”) ending 30 June 2023.


In Thousands ofUAE Dirhams	Q22023	Q22022	% Change (YoY)	H12023	H12022	% Change (YoY)
Revenues	1,388,839	1,516,589	(8%)	2,820,336	2,965,521	(5%)
Gross Profit	345,546	378,623	(9%)	703,546	722,723	(3%)
Gross Profit Margin	25%	25%		25%	24%
EBIT	52,762	63,569	(17%)	115,762	138,575	(16%)
EBIT Margin	4%	4%		4%	5%
EBITDA	143,293	155,534	(8%)	296,456	324,201	(9%)
EBITDA Margin	10%	10%		11%	11%
Net Profit	18,960	44,568	(57%)	42,869	91,871	(53%)
Net Profit Margin	1%	3%		2%	3%

Financial Performance Commentary

Demonstrating resilience and remaining profitable in the face of weak market conditions including FX headwinds, Aramex reported Revenues of AED 2.8 billion in H1 2023, a 5% decline YoY. In line with the global industry trend of softening volumes, the Q2 2023 Revenue also declined by 8%. However, excluding the currency exchange impact, the Q2 Revenue fell by 5%. Worth noting that Q2 2023 had fewer working days, mainly due to the shift of Islamic public holidays observed in certain markets during the quarter, compared to the same period of last year where these public holidays fell during Q3 2022.

Aramex maintained a robust Gross Profit Margin of 25% over both the half year and second quarter periods, despite a 3% and 9% YoY reduction in Gross Profit for H1 and Q2 2023 respectively. This tenacity reflects Aramex’s consistent investments in efficiency-maximizing initiatives and cost optimization strategies, enabling the Company to navigate economic cycles with strength.

The Company’s prudent cost management was further evident as the consolidated Group Selling, General, and Administrative Expenses (SG&A) decreased by 3% YoY through the Q2 2023 period. Additionally, organic SG&A, which excludes MyUS, experienced a notable decline of 12% during the same quarter, showcasing Aramex’s agility in cost control.

Net Profit of AED 42.8 million was reported in the first half of 2023, compared to AED 91.9 million in H1 2022, with a similar decline of 57% for Q2 2023. This decrease is attributed to a trickle-down impact from topline softening, as well as an increase in finance expenses associated with the MyUS acquisition, which is in line with Company’s strategy to leverage the balance sheet.

Aramex maintained a robust balance sheet position with Net Debt-to-EBITDA ratio of 2.6x and a healthy cash balance of AED 502 million as of 30 June 2023.

Othman Aljeda, Chief Executive Officer of Aramex, said: “Reflecting on Aramex’s financial results for the first half of 2023, we performed robustly, despite continued challenges in an environment characterized by cost inflation, lower freight rates, softening shipment volumes and FX fluctuations. Therefore, our focus in the second half of the year will remain firmly on cost reduction and further efficiencies on Operating Expenses and SG&A, so that we can continue to be a very well-positioned, disciplined and agile business, with a strong balance sheet and key competitive strengths for the long-term.

As a leading logistics provider, we recognize the need for agility and adaptability in today’s ever-evolving landscape. We continue to strategically invest in cutting-edge technologies, optimize our operations, and enhance our service offerings to meet the diverse and changing needs of our valued customers. This is evidenced by the productivity gains in our courier services and the doubling of our Pick-Up and Drop-Off (PUDO) network across the region. We will continue to reposition the business to higher margin accounts, including specialized verticals and more B2B business. We continue to focus on quality revenues and strategic growth to create long-term value for our stakeholders.

Our strategically balanced geographical presence remains a pillar of strength, with solid performance in key markets, including the GCC region, accounting for 39% of total Revenues, while continuously reinforcing revenue performance in Europe and North American outbound markets.”

Business Performance

International Express (Including Shop & Ship and MyUS)

In Thousands ofUAE Dirhams	Q22023	Q22022	% Change (YoY)	H12023	H12022	% Change (YoY)
Revenues	561,041	588,432	(5%)	1,127,622	1,147,409	(2%)
Gross Profit	188,324	189,708	(1%)	372,120	367,490	1%
Gross Profit Margin	34%	32%		33%	32%

International Express Shipment Volumes

In millions of shipments		Q22023		Q22022		% Change (YoY)		H12023		H12022		% Change (YoY)
Total Number of Shipments		5.5		5.9		(7%)		10.9		11.3		(3%)

International Express business reported AED 372 million in Gross Profit for H1 2023, a YoY increase of 1%. The corresponding Gross Profit Margin increased to 33% benefitting from MyUS, operational efficiency and improvements in linehaul costs.

In Q2 2023, the International Express product handled a total of 5.5 million shipments, experiencing a YoY decline of 7% in line with the global industry’s overall performance. Amidst the challenging market conditions, there were positive signs of stabilization, with a noteworthy 2% growth in shipments during Q2 2023 compared to the first quarter of the year, signaling an encouraging trend in the post-pandemic environment.

Domestic Express