Meituan Dianping Reports Better-Than-Expected Earnings

What’s new: China’s food delivery platform Meituan Dianping reported that second-quarter sales climbed 8.9% to 24.7 billion yuan ($3.6 billion), beating analysts’ estimates of 23.6 billion yuan.

The Tencent-backed company reported a profit of 2.2 billion yuan, compared with earnings of 875.8 million for the same period of 2019. The 2020 period mainly benefited from a 13 million yuan income tax credit, compared with income tax expenses of 226 million a year ago.

Meituan said its core food delivery business showed gradual recovery after the company posted its first quarterly revenue decline in the first quarter during the Covid-19 shutdowns, which continued to impact the daily operations of its merchants, including restaurants, hotels and other local services providers.

Revenues from in-store, hotel and travel businesses decreased by 13.4% year-over-year. Profit from the segment fell by 11.9%, though it showed significant improvement from the first quarter.

The background: As one of China’s two largest food delivery services, Meituan competes head-to-head with Alibaba-owned Ele.me.

Alibaba slightly beat Wall Street estimates in the second quarter as it posted results Thursday. The company didn’t disclose the contribution of Ele.me to its total revenue of $21.8 billion. But on an earnings call with analysts, Alibaba Chairman and Chief Executive Officer Daniel Zhang said Ele.me achieved positive results in the June quarter and positive year-over-year growth in gross merchandise value, signaling a healthy recovery of the business.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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