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Wed 3 Feb 2016 01:33 PM

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Dubai logistics giant targets 2-3 buyouts in 2016

Courier Aramex says it will target Africa, Asia and United States for these acquisitions

Dubai logistics giant targets 2-3 buyouts in 2016

Aramex is targeting two or three acquisitions this year as the Dubai-based courier seeks to expand in its key markets and support further growth from e-commerce, its chief executive said on Wednesday.

The firm considers Africa and Asia as key markets while it was also looking for opportunities in the United States, specifically companies that facilitate international e-commerce, Hussein Hachem told reporters at a company event.

The small package market - delivering parcels up to 5kgs and which contributes around 70 percent of Aramex's revenue - would be the main target area for deals, he added.

Aramex has already announced one deal in 2016 -- Fastway Couriers' New Zealand and Australian business. This is expected to increase the contribution of its Asia business this year to around 18 percent of revenue from 10 percent previously, said Chief Financial Officer Bashar Obeid.

Acquisitions would be funded by the remaining half of a $150 million loan it signed in February 2015, with the company able to secure a further $150 million from the same group of local banks should it be required.

Coupled with acquisitions, Aramex would also begin investing in start-ups in 2016, with a target of around five investments this year, Hachem added.

The firm would set aside a further $5 million in 2016 to the employee incentive scheme for which the first contribution of $12.5 million dragged its fourth-quarter net profit down by 36 percent to 57.6 million dirhams ($15.7 million), Obeid said.

The five-year plan was aimed at boosting the performance of senior management and talented individuals and while payouts would depend on both the performance of the company and its share price, the cost was expected to drop to around $2.5 million in 2017, he added.

Excluding the provision, its fourth-quarter and full-year net profit would have risen by 16 percent and 12 percent year on year respectively, the company said in a statement.

Revenues grew by 5 percent in the fourth quarter to 1 billion dirhams, although a further 3.5 percentage points of growth was wiped out by foreign exchange losses, primarily on the euro, South African Rand and Australian Dollar.

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