Meituan, China’s largest food delivery platform, surpassed fourth-quarter sales projections by 35% to 37.9 billion yuan (US$5.8 billion), as its online and offline operations continue to rebound from the pandemic’s impact on consumer spending.
The Beijing-based company’s revenue was above the market’s consensus forecast of 36 billion yuan, according to a Bloomberg analyst survey, and was up from 28 billion yuan in the same quarter the previous year. However, despite increasing spending, net profit fell by more than 250 percent, resulting in a loss of 2 billion yuan.
Revenue for the whole year climbed as well, hitting 114.8 billion yuan in 2020, up 18% from 97.5 billion yuan in 2019, and above expectations. The company’s net profit for the year increased by 110 percent to 4.7 billion yuan, up from 2.2 billion yuan in 2019. The announcement comes as the firm continues to centralize its meal delivery service and uses its community group buying service to expand its user base outside of China’s major cities.
“Inspite of our considerable expenditures in various new segments limiting our overall profitability in 2020, these new ventures are providing greater value to consumers, business partners, merchants and the diverse society at large,” Meituan exclaimed in a statement after the market closure.
Heavy investment in the company’s community group buying activities, an increasingly competitive market area in China, is expected to result in more operational losses in future quarters, according to the company.
On Friday, the company’s stock finished at HK$302 (US$39) in Hong Kong, up 5%. Its stock price has fallen from a high of HK$460 in mid-February, but it has roughly tripled since the start of 2020, as pandemic lockdowns and changing consumer habits led to increased online spending throughout the year.