Logistics giant says it expects insurance policies to cover the losses and damages but has made provisions in Q3 financial statements
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Dubai-based logistics giant Aramex said on Thursday that it will makes provisions of more than $15 million for disruption caused to its business by the Beirut port explosion and a fire at its warehouses in Morocco.
A total of $15.1 million will appear in the company’s financial statements for the third quarter as a result of the blast damage to its entire warehouse facility in Beirut and partial damage to three storage units in Casablanca recently.
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A non-recurring provision of $2.7m is related to its Beirut facilities with a further $12.4m related to the fire outbreak in Morocco, the company said in a filing to the Dubai Financial Market (DFM).
Aramex shares on the DFM were trading down by more than 2 percent in early trading after the company announcement.
“The company would like to notify the market that Aramex maintains comprehensive insurance coverage policies which should cover both incidents and that the company’s management has appointed a loss assessor to manage both claims with the respective insurance companies,” its statement said.
It added that it expects the insurance policies to cover the losses and damages but was making the provisions in line with the requirements of the International Financial Reporting Standards (IFRS).
On August 4, a large quantity of ammonium nitrate stored in Beirut port exploded. Approximately 2,750 tonnes of highly flammable substance – commonly used in fertiliser, and the main component in many types of mining explosives – had been abandoned without proper safety measures for the previous six years, following its confiscation by Lebanese authorities from the abandoned ship MV Rhosus.
The disaster killed roughly 200 people, wounding 6,000 more, as the blast sent shock waves through Beirut’s industrial waterfront into densely populated residential and shopping districts.
In August, Aramex reported a 23 percent drop in second quarter profit, which it said was due to several “unforeseen costs prompted by the global onslaught of Covid-19”.
Aramex reported net profit of AED94.4 million for the quarter, with revenues up 4 percent to AED 1,332 million, compared to the same period last year.
Overall shipment volumes grew by 26 percent, the company said, following a surge in e-commerce activities resulting from increased online shopping during Covid-19 related lockdown. Aramex also reported increased demand for healthcare-related shipments.
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