Dubai-listed logistics company Aramex has strongly hinted that the industry could see mergers and acquisitions in the near future, stating in its Q3 financial results that the sector is "ripe for consolidation".

Aramex posted a year-on-year Q3 2020 net profit fall of 59 percent, the company said it was actively seeking potential opportunities that will ‘realise synergies to enhance the sector’s efficiency, reliability and end-to-end service level’.

The company said the road to recovery from COVID-19’s impact on the economy is not yet clear.

“There is also ambiguity around shifts in consumer demand trends in a post-COVID-19 world,” the statement said.

The statement revealed Aramex is investing in infrastructure, technology and innovation in the last mile delivery segment, which it said was ‘one of the most critical and competitive stages of the delivery journey’.

While COVID-19 has accelerated growth in the e-commerce industry, which is the dominant driver in Aramex’s top line growth, the pandemic has also increased costs, it said.

“COVID-19 has also increased Aramex’s overall operating costs across multiple parts of its business, including costs related to scaling last mile operations and cross border transportation.”

Aramex posted a Q3 2020 profit of AED 46.2 million ($12.6 million), compared to AED 113.8 million ($31 million) in 2019, a fall of 59 percent.

However, excluding the non-recurring provision, net profit would have been down by 13 percent year-on-year at AED 99.1 million, the statement said.

(Reporting by Imogen Lillywhite; editing by Seban Scaria)

(imogen.lillywhite@refinitiv.com)

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