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Food delivery giant Meituan Dianping posts Q1 loss as pandemic hits orders

Food delivery giant Meituan Dianping posts Q1 loss as pandemic hits orders

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2 -min read
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[BEIJING] Chinese food delivery giant Meituan Dianping posted a quarterly loss on Monday, as orders fell following nationwide business curbs imposed in late January to contain the spread of the novel coronavirus.

The loss for the first quarter ended March 31 was 1.58 billion yuan (S$315.5 million), compared with a 1.43 billion yuan loss for the period a year earlier.

Total revenue fell to 16.75 billion yuan from 19.17 billion yuan a year earlier. Analysts on average had expected revenue of 16.11 billion yuan, according to IBES data from Refinitiv.

Meituan, whose core food delivery business dominates the market in China, posted first-quarter gross transaction volume of 71.50 billion yuan in food delivery, a fall of 5.4 per cent year on year.

The pandemic caused by the virus has disrupted supply chains and severely hit consumer demand as people are forced to stay indoors to limit contagion, spurring many Chinese companies to lay off workers, cut salaries or shut down completely.

Although the world's second-largest economy started to slowly reopen businesses this quarter, for a recovery in manufacturing and consumer activity, Beijing-based Meituan warned its business will still be affected for the rest of 2020.

"Factors including the ongoing pandemic precautions, consumers' insufficient confidence in offline consumption activities and the risk of merchants' closure would continue to have a potential impact," it said in the earnings report.

Meituan has faced criticism from an industry body in the southern province of Guangdong, which accused it of charging restaurants excessively high commissions during the pandemic. Meituan responded that its commission rates on more than 80 per cent of the food vendors on its platform ranged from 10 per cent to 20 per cent, adding that average profit per delivery was less than 0.2 yuan, making up 2 per cent of total revenue.

REUTERS

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