Chinese food delivery giant Meituan posted a bigger than expected 21 per cent rise in second-quarter revenue on Wednesday, defying a slowing Chinese economy.
Meituan, which has an app that provides services as varied as bike-sharing, ticket-booking and maps, reported revenue in the three months to June 30 at US$11.55 billion, up from $9.548 billion in the same period a year earlier.
That compared with the $11.39 billion average of analyst estimates compiled by LSEG.
A lacklustre economic recovery in China has led to more firms pivoting towards low-cost and discounted products in the world’s second-largest economy and Meituan has benefitted from delivering these goods for a small fee.
Chief Executive Wang Xing told analysts in a post earnings conference call that Meituan had managed to adapt to China’s latest consumption environment to achieve solid results.
“Compared to other segments, the local commerce industry in China still has significant growth potential through digitalisation,” he said.
Meituan’s total segment operating profit for the second quarter increased from $830.3 million to $1.954 billion, and the total segment operating margin increased from 8.7 per cent to 16.9 per cent.
Revenue from core local commerce, which includes food delivery and non-food delivery service Meituan Instashopping, rose 18.5 per cent to $8.531 billion.
Sales from new initiatives grew by 28.7 per cent year-over-year to $1.367 billion.
Meituan’s hotel booking and travel sector businesses “maintained strong growth” with order volumes rising 60 per cent in the second quarter, the company said in its earnings report.
Last year, Meituan announced it was buying Light Year, an artificial intelligence (AI) startup established by Meituan co-founder Wang Huiwen, for $281 million as major tech firms in China increase their bets on AI.
Recent innovations also include drone deliveries. Since mid-August, Meituan has launched a drone delivery service to the Great Wall, with a minimum order of $2.812 plus $0.5624 delivery fee, to tourists wanting food or emergency supplies delivered within 15 minutes.
In April, shortly after CEO Wang Xing took control of the firm’s international business, Meituan began advertising jobs in Riyadh for food delivery platform Keeta, which had launched a year before in Hong Kong.
Wang has stressed that exploration into new markets for Keeta was still in the “early stages”, with Gulf countries, European and Southeast Asian markets all under consideration.
Meituan remains China’s biggest delivery platform, with a 69 per cent share of the US$140.62 billion market, according to data from researcher ChinaIRN.
- Reporting by Casey Hall; Editing by David Goodman, Miral Fahmy and Mark Potter, of Reuters.
