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One of China’s largest express delivery businesses today reported a jump in first-quarter profit amid the country’s Covid lockdowns. It also, however, warned of disruption in the second quarter.
ZTO Express, nearly 9% controlled by Alibaba Group, said revenue in the three months to March rose by 22.1% from a year earlier to 7,9 billion yuan, $1,25 billion. Net income, helped by revenue gains and higher prices, rose by 64.1% to 875.5 million yuan.
“Despite (the) severe impact from Omicron induced shutdowns starting in March, the company grew parcel volume 5.2 billion, or 16.8%, while achieving high levels of customer satisfaction as well as earnings growth,” ZTO said in a filing.
Chairman Lai Meisong noted a downturn in industry business in April as lockdown deepened in the world’s second-largest economy, however. “Abrupt Omicron outbreaks that scattered across the country in mid-March disrupted the industry’s growth momentum, causing its parcel volume to decrease by nearly 12% year over year for the month of April,” he said.
“ZTO Shanghai was among the first few logistics companies to resume operations in early-May. China is committed to the containment of the virus and a steady economic growth at the same time. We are hopeful to see a carefully staged rebound underway through supportive central policies and coordinated local efforts,” Lai said.
Lai is worth $5.3 billion on the Forbes Real-Time Billionaires List today.
“We believe the foundation for China’s economic growth is sound, and even though prevention will become part of a daily norm, being an integral part of people’s day-to-day lives, express delivery industry will continue to be the catalyst of the economic expansion as well as benefiting from it,” Lai said.
The company revised its annual parcel volume projection to be in the range of 24.96 billion to 25.86 billion for 2022, representing a 12% to 16% increase year over year. Relative to overall industry performance, the company “is confident to achieve one percentage point or more increase,” ZTO said.
ZTO’s U.S.-traded shares have lost nearly 21% in the past year. They closed at $25.20 today.