Meituan's Profit, Revenue Beat Expectations Amid Competitive Landscape -- Update

Dow Jones03-22

By Kimberley Kao

Meituan reported better-than-expected quarterly profit and revenue, driven by the continued recovery in Chinese consumer spending and a rebound in the technology giant's local businesses.

The Beijing-based shopping-and-delivery platform on Friday posted a fourth-quarter net profit of 2.22 billion yuan ($308.4 million), compared with a net loss of CNY1.08 billion a year ago. It attributed the earnings to higher operating profit from its core local commerce segment and a narrower operating loss from new initiatives.

Revenue rose 23% to CNY73.70 billion.

Both measures beat the expectations of analysts polled by FactSet.

After four straight quarters of profit, 2023 also marked the return to annual profit for one of China's most valuable internet companies. Meituan reported a net profit of CNY13.86 billion on CNY276.74 billion in revenue for the year.

Quarterly revenue from its core local commerce segment, which includes delivery services for food and other items through Meituan Instashopping, rose 27%, helped by a 25% rise in on-demand delivery transactions.

Meanwhile, gross transactions for its in-store, hotel and travel businesses doubled in 2023 due to a rebound in travel.

However, its community group buying unit suffered a loss due to fierce competition and slower-than-expected growth in scale.

"While Meituan Select is still part of our online grocery strategy, we admitted this market was much tougher than we originally expected," the company said. Meituan said it will make strategic changes to refine the business model.

Citi analyst Alicia Yap welcomed the plan.

She said that while overall results beat expectations, restructuring Meituan Select to reduce its losses will significantly help to improve the overall profitability outlook. In a note, Yap said a key focus will now be on the company's outlook for the macro environment and overall competitive landscape, as well as plans to expand into other countries, Yap said in a note.

Meituan remains one of China's biggest delivery platforms.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

March 22, 2024 08:16 ET (12:16 GMT)

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Meituan's Profit, Revenue Beat Expectations Amid Competitive Landscape -- Update

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