Meituan narrows losses in first quarter this year, beating expectations
May 24, 2019 (China Knowledge) - Food delivery services company Meituan-Dianping will continue expanding into China’s grocery retail sector despite having closed a number of its Ella supermarkets earlier this year.
The company has pledged to continue with its strategy of disciplined capital allocation for its new initiatives and aims to leverage its large scale and structural advantages in its user base, merchant base and delivery network to strengthen its market position.
During the first quarter this year, the company had managed to narrow its net loss to RMB 1.4 billion from RMB 21 billion during the same period last year due to strong performances across all the company’s business segments, beating analysts estimates of a RMB 2.7 billion net loss.
Total revenue in the first quarter grew by 70.1% to RMB 19.2 billion from RMB 11.3 billion a year ago as the company reported an increase in number of users and merchants. Revenue for the company’s core food delivery business increased 51.7% year-on-year to RMB 10.7 billion while selling and marketing expenses as a percentage of total revenue decreased to 19.3% from 25.2% as the company’s benefits from greater economies of scale.
Meituan will now focus on improving its remaining two Ella stores in Beijing will also launching a new pilot program of operating smaller grocery stores in residential communities. At the same time, the company will also continue restructuring its loss-making Mobike operations while cutting down subsidies for its ride-hailing services.
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