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Full year revenues climb 9%, and net profits increased 2%
Aramex announced its financial results for the Fourth Quarter and Full Year ended 31st December 2017. Aramex’s Q4 2017 Revenues registered double-digit growth of 14.0% to AED1,324.0 million, compared to AED1,158.0 million in the corresponding period of 2016. Q4 Net Profits reached AED165.0 million, which represents an increase of 25.0%, compared to AED131.8 million in Q4, 2016.
2017 Full Year Revenues reached AED4,721.0 million; up by 9.0% compared to AED4,343.0 million in 2016. Revenues were impacted by currency fluctuations, mainly in Egyptian Pound. Excluding this impact, Year-on-Year Revenues would have grown by 11.0%. Aramex's Net Profits in 2017 increased by 2.0%, to AED435.4 million, compared to AED426.6 million in 2016. Net Profit growth in 2017 was impacted by the one-time fair value adjustment related to Aramex’s investment in AMC Logistics joint venture in Egypt in Q2, 2016. Excluding this adjustment, Net Profits would have grown by 13.0% in 2017.
The results were mostly driven by the surge of cross-border eCommerce activities globally, which continue to fuel the growth of the Company’s International Express business. While being excited about the growth potential of global eCommerce business, the Company witnessed an exceptional growth of Express volumes in Q4, which highlighted a need to boost investments in last-mile capacity solutions across all its key markets.
In Q4, 2017, Aramex's International Express business performed strongly, growing by 22.0% to AED609.0 million. This is attributed to the strong growth in cross-border eCommerce across all regions. Domestic Express business grew by double-digit of 10.0%, to reach AED272.0 million, fuelled by the rise in domestic eCommerce across most of the regions, especially in the GCC. Freight-Forwarding business grew by 11.0%, to AED304.0 million, due to the excellent rebound in Aramex’s Oil and Gas business in the GCC, and the growth of business in North Africa, Levant, and Asia. Aramex’s Logistics and Supply Chain Management business increased by 2.0%, to AED69.0 million, as a result of the growth of business in key markets and mostly in the UAE and Singapore.
For the full year 2017, Aramex's International Express business grew by 19.0% to AED2,007.0 million, due to the strong growth in cross-border eCommerce across all regions. The strong performance of Africa and Asia-Pacific was mirrored by a 4.0% growth in the Company's Domestic Express operations, registering AED1,022.0 million. Growth in the Oil and Gas business in the GCC, together with a strong performance in Africa and Asia saw Aramex's Freight-Forwarding business increasing by 2.0%, to AED1,157.0 million. Aramex's Logistics and Supply Chain Management operations were impacted by currency fluctuations, particularly in the Egyptian Pound, and decreased by 2.0%. Excluding this impact, it would have grown by 6.0%.
While Aramex reported strong growth in International Express eCommerce business, the Company’s margins came under pressure due to applying volume-based incentive rates to certain key customers. In addition, Aramex adopted a variable last-mile business model in 2017, which put pressure on Domestic Express margins while capping the increase in operating expenses.
Looking ahead, the Company is very confident about the growth potential in 2018 amid the continuous boom in eCommerce activities globally, yet it has to remain cautious about the changing competitive environment that requires highest levels of efficiencies and operational effectiveness in meeting customers’ expectations. The Company will be focusing on key strategic initiatives in 2018 aiming at transforming the business into a technology-driven enterprise and enhancing operational efficiencies through various cost restructuring programmes. Freight-Forwarding services, mostly driven by Oil and Gas activities, started to pick up in the fourth quarter, providing great business potential. Aramex will be expanding investments in technology and talent to accelerate the growth of Supply Chain and Freight-Forwarding services in various market segments and across all markets.