By Casey Hall
SHANGHAI (Reuters) – Chinese food delivery giant Meituan reported a stronger-than-expected 21% rise in second-quarter sales on Wednesday despite a slowdown in China’s economy.
Meituan has an app that offers services as diverse as bike-sharing, ticket booking and maps. In the three months ended June 30, the company reported revenue of 82.3 billion yuan ($11.55 billion), up from 67.9 billion yuan in the same period last year.
This compares with LSEG’s average analyst estimate of 81 billion yuan.
Total segment operating profit increased from 5.9 billion yuan to 13.9 billion yuan in the second quarter, and total segment operating margin increased from 8.7% to 16.9%.
In China, the sluggish economic recovery has led more companies in the world’s second-largest economy to focus on low-cost and discount products. Meituan benefits from being able to deliver these goods for a small fee.
Revenue from local core commerce, which includes food delivery and non-food delivery service Meituan Instashopping, rose 18.5% to 60.7 billion yuan.
Revenue from new initiatives increased 28.7% year-on-year to 21.6 billion yuan.
Meituan’s hotel bookings and travel businesses “maintained strong growth,” with order volumes increasing 60% in the second quarter, the company said in its earnings report.
Last year, Meituan announced that it was buying Light Year, an artificial intelligence (AI) startup founded by Meituan co-founder Wang Huiwen, for $281 million, as major technology companies in China increasingly embrace AI.
Drone deliveries are also among the new innovations. Since mid-August, Meituan has been offering a drone delivery service to the Great Wall of China. The minimum order value is 20 yuan plus a 4 yuan delivery fee for tourists who want to have food or emergency supplies delivered within 15 minutes.
In April, shortly after CEO Wang Xing took control of the company’s international business, Meituan began advertising jobs in Riyadh for food delivery platform KeeTa, which launched in Hong Kong a year earlier.
Wang stressed that KeeTa’s expansion into new markets is still at an “early stage” and that the Gulf states, as well as the European and Southeast Asian markets, are being considered.
According to data from market research institute ChinaIRN, Meituan remains China’s largest delivery platform with a 69 percent share of the 1 trillion yuan market.
(1 US dollar = 7.1257 Chinese renminbi yuan)
(Reporting by Casey Hall, editing by Jacqueline Wong, David Goodman and Miral Fahmy)
