Alibaba profit falls 88 %, but revenue rises because of surge in orders
23 May, 2020
Chinese e-commerce leader Alibaba said Friday its net profit fell 88 percent in the first quarter of the year, but revenue beat analyst forecasts despite the disruptions caused by the coronavirus.
The Hangzhou-based company said net profit fell to 3.16 billion yuan ($447 million) in January-March, compared to 25.83 billion yuan over the same period this past year.
But company officials expressed optimism after earnings came at 114.31 billion yuan, practically seven percent higher than the common forecast of analysts polled by Bloomberg.
The pandemic emerged late last year in the central Chinese city of Wuhan, later spreading globally.
Aggressive containment measures have largely tamed the outbreak in China and allowed economical activity to resume weeks ago, even while other nations continue steadily to struggle.
“Although the pandemic negatively impacted the majority of our domestic core commerce businesses starting in late January, we've seen a reliable recovery since March,” Chief Financial Officer Maggie Wu said in the company’s profit statement.
Alibaba’s expectations for the quarter have been a mystery, with top company officials saying early in the pandemic that predictions were extremely difficult as a result of unprecedented nature of the outbreak.
China imposed quarantines on millions of folks and turn off transport throughout the country through the peak of its coronavirus crisis in January and February.
That caused uncertainty over whether the transport disruptions would hurt Alibaba’s core e-commerce business or whether earnings would get yourself a bump as millions idled in the home considered online platforms for food and basic necessities.
Analysts have said that eventually the longer-term social-distancing concerns linked to the pandemic could further boost e-commerce in China, where it really is already the go-to shopping way for vast sums of consumers.
“The pandemic has fundamentally altered consumer behaviour and enterprise operations, making digital adoption and transformation a necessity,” Alibaba CEO Daniel Zhang said in the profit statement.
“We believe we will emerge out of this crisis stronger and become prepared to capture more growth in the future.”
Alibaba’s dominant position in e-commerce means its email address details are closely watched as a barometer of overall consumer sentiment.
Quarterly revenue growth, the main element measure of the company’s business health, has continued a gradual slowdown recently from levels more than 50 percent.
Analysts note, however, that it might be difficult for Alibaba to keep up those past growth rates forever, and that consumption should remain solid in the future-facilitated by China’s rapid digital transformation and a government push to inspire domestic consumption as an economic driver.
A leadership team led by CEO Daniel Zhang has bought out after charismatic founder Jack Ma stepped aside as group leader in September in a succession years in the making.
Listed in america since 2014, Alibaba in late November raised billions in another listing on Hong Kong’s stock market.
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