Bloomberg News

Aramex Plunges in Dubai After 2011 Dividend Cut: Dubai Mover

February 27, 2012

Aramex PJSC (ARMX) headed for the biggest drop in a year and led the decline in Dubai’s benchmark stock index after the courier company cut its dividend.

The shares slid 5.1 percent, poised for the biggest slump since February 2011, to 1.85 dirhams at 1:17 p.m. in Dubai. The stock was the biggest loser by index points on Dubai’s DFM General Index, (DFMGI) which retreated 1 percent, the most since Feb. 15. Aramex has gained 2.8 percent so far this year compared with a 23 percent increase in Dubai’s benchmark.

The company “used to give higher rates” and the current dividend “is less than what investors expected,” said Samer Darwiche, a Dubai-based associate at Gulfmena Investments.

The board of Aramex, the largest courier company in the Middle East, proposed a dividend of 5 fils a share for last year, 2.5 fils less than what it paid for 2010, according to data compiled by Bloomberg. Trading values in Dubai had improved after companies paid higher dividends and posted an increase in earnings. The benchmark index surged 2.7 percent yesterday as the value of shares traded soared to the highest since April 2010.

Aramex, which said Feb. 2 it will focus on strategic expansion in emerging markets, posted a 4 percent increase in fourth-quarter profit to 57.2 million dirhams ($16 million). The company last year acquired Oneworld Courier and In-Time Couriers in Kenya and Berco Express (Pty) Ltd. of South Africa.

“Aramex made acquisitions in 2011 to expand, so a lower dividend is actually a prudent step,” Gulfmena’s Darwiche said.

Eight analysts recommend investors buy Aramex shares, while two have a hold rating, according to data on Bloomberg.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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