Meituan’s (3690) adjusted net profit in the second quarter plunged by 89 percent from one year ago – much more than expected – as its core business saw three-quarters of operating profit wiped out amid fierce food delivery competition in mainland China.
This adjusted net profit, based on non-IFRS accounting standards measures, stood at 1.49 billion yuan (HK$1.61 billion) in the April-to-June period, far below the market estimate of 9.85 billion yuan. The Chinese on-demand delivery giant posted adjusted earnings of 13.6 billion yuan one year ago.
Moreover, Meituan’s revenue also missed market expectations with 91.84 billion yuan last quarter, although the figure is 11.7 percent higher than one year ago.
For the first six months of the year, the company's adjusted net profit was dragged down to 12.4 billion yuan, down by 41 percent from one year ago. First-half revenue increased 14.7 percent to 178.4 billion yuan.
“Due to the intensified competition in food delivery sector,” the operating profit of Meituan’s core local commerce segment shrank 11.5 billion yuan, or 75.6 percent, to 3.7 billion yuan for the second quarter from one year earlier, according to an exchange filing.
The operating margin for the core segment also plunged 13.7 percentage points to 5.7 percent within one year.
But Meituan said its delivery business solidified the company's market position in the cut-throat subsidy war, which was initiated by JD.com (9618) in April and fueled by Alibaba (9988). Amid the repeated urges by mainland authorities to end the price war, the trio made commitments to anti-involution earlier this month.
Before the results announcement, Meituan’s shares declined 3 percent to HK$116.30 apiece, their lowest since early September of 2024.
THEMIS QI
