China’s Meituan reports wider loss, revenue rises

FILE PHOTO: The World Artificial Intelligence Conference (WAIC) in Shanghai
FILE PHOTO: People walk past a Meituan logo at the World Artificial Intelligence Conference (WAIC) in Shanghai, China July 8, 2021. REUTERS/Yilei Sun

March 25, 2022

BEIJING (Reuters) -Chinese food delivery company Meituan on Friday reported a better than expected 30.6% rise in fourth-quarter revenue at the same time as investment in new initiatives increased losses and costs related to regulatory scrutiny rose.

Meituan, whose services also include restaurant reviews and bike-sharing, said revenue rose to 49.52 billion yuan ($7.78 billion) in the final three months of 2021.

Consensus analysts expectations were for 49.20 billion yuan, Refinitiv data showed.

The quarterly loss grew to 5.34 billion yuan from a loss of 2.24 billion yuan a year earlier, as Meituan continued to invest in initiatives including its community e-commerce unit Meituan Select.

Meituan expects its operating loss from new initiatives to narrow in 2022, CEO Wang Xing said on a conference call.

Chinese regulators last year ordered food delivery companies to provide their workers with insurance and pay income above the minimum wage.

Together with other tech giants such as Alibaba Group and Tencent Holdings, Meituan was targeted by a crackdown as Beijing imposed rules on a sector that had been largely unregulated.

Its Hong Kong-listed shares have lost half their value in the last 12 months.

Friday’s results showed Meituan’s food delivery-related cost, which includes paying delivery riders, increased by 38.3% in the quarter to 68.18 billion yuan.

Revenue in new initiatives rose 58.7% year over year to 14.67 billion yuan.

Sales from food delivery, accounting for over half of Meituan’s revenue, increased 21.3% to 26.13 billion yuan.

The company also for the first time disclosed its commission revenue, which made up about 30% of its food delivery sales in the quarter.

Meituan said earlier this month it would lower commission charged to some merchants.

That includes halving technology service fees for vendors in pandemic-affected areas, capped at one yuan per order, after Chinese regulators asked food delivery companies to reduce fees to help lower costs for catering businesses hit by the pandemic.

($1 = 6.3645 Chinese yuan renminbi)

(Reporting by Yingzhi Yang and Brenda Goh; editing by Jason Neely, Barbara Lewis and David Goodman)