Aramex warns of uncertain outlook amid sluggish trade

Firm made net profit of Dh57.2m in fourth quarter

Published: 00:00 February 3, 2012

By Kevin Scott, Staff Reporter

Dubai: Logistics firm Aramex warned of an uncertain outlook for 2012 yesterday amid concerns over sluggish global trade and continuing instability in the Middle East.

The Dubai-listed company also said it would maintain its focus on emerging markets as growth continues to stall in developed economies.

Aramex made a net profit of Dh57.2 million in the fourth quarter, up from Dh55 million in the corresponding period in 2010, the company said in a statement to the Dubai Financial Market.

Full-year net profit was Dh211.5 million, up four per cent from Dh204 million in the year-before period. Revenues for 2011 stood at Dh2.5 billion against Dh2.2 billion in 2010, up 16 per cent.

The results were broadly in line with analysts’ expectations, reflecting a significant growth in revenues but only a modest increase in profits.

‘Excellent platform’

“Aramex achieved a significant growth of revenues across the GCC region, despite instability in some Mena [Middle East and North Africa] countries during the year,” said Petr Molik, group chief financial officer at Menacorp, an Abu Dhabi-based brokerage.

“Strong growth coming from the UAE and Saudi Arabia provides an excellent platform for consolidation and margin growth this year. We are hoping for better cost control to improve the net profit margin back towards ten per cent.

“A current P/E [price-to earnings] ratio of 12.5x is relatively high but justified by excellent brand recognition, a strong cash position, good management and potential for improved margins in 2012,” he added.

In December last year, Aramex completed the acquisition of South Africa’s Berco Express as part of its global expansion amid a difficult business environment in parts of the Middle East.

It followed a recent joint venture with SinoAir in China and the acquisition of OneWorld Courier and In-Time Couriers in Kenya in the first quarter of 2011. Aramex’s share price fell 0.56 per cent to Dh1.79 on the DFM yesterday.

“Aramex has been one of the most resilient stocks throughout the market weakness; it outperformed Dubai’s exchange big time,” said Chahir Hosni, equity sales manager at EFG-Hermes.

“However, the stocks most likely to benefit from a recovery in the market are those that were badly affected in 2011. Aramex will benefit from any upside but to a lesser extent,” he added.

Egypt operations

In January 2011, Aramex was forced to suspend its operations in Egypt during an uprising that ultimately ended the 30-year rule of former president Hosni Mubarak. However, the company says profits were boosted due to investments elsewhere in the region.

“Our net profits recorded modest growth due to high fuel prices, [an] increase in overheads, initial investments in our Greenfield operations in Africa, and political instability in some countries in the Middle East and North Africa region,” said Fadi Ghandour, Aramex’s founder and CEO.

“Our performance for this year [2012] is expected to maintain this trajectory and we prefer to wait until the end of the first quarter to reassess our outlook for the rest of the year,” he added.

  • Dh55m: Aramex net profit in fourth quarter 2010
  • Dh2.5b: revenues for Aramex last year
  • 0.56%: drop in Aramex share price on DFM yesterday
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