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Alibaba is China’s top e-commerce company by market share.
Reuters
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China’s Alibaba Group Holding Ltd. on Tuesday reported an 86% drop in fourth-quarter profit, largely due to valuation changes from equity investments, and the company’s U.S.-listed shares fell despite better-than-expected sales. Shares fell about 6% in early trading.
The company also announced that it would revive plans first floated in 2022 to upgrade its secondary listing in Hong Kong to primary listing while maintaining its primary listing in New York. The company aims to complete this dual primary listing by August.
China’s largest e-commerce group by market share announced the biggest organizational change in its 25-year history, splitting into six divisions and refocusing on its core business, including domestic e-commerce, in March 2023. It’s been a turbulent year since then.
Chinese consumers are also spending cautiously amid an economic slowdown and prolonged real estate recession following the coronavirus pandemic.
Alibaba’s focus on lower-priced products in response to cautious consumer spending boosted domestic e-commerce sales, driving overall revenue up 7% for the quarter ended March 31.
However, the group’s net profit fell to 3.27 billion yuan ($452 million) compared to 23.52 billion yuan in the same period last year.
Alibaba (Baba) shares fell 5.6% in early New York trading.
Chairman Joe Tsai told analysts on a post-earnings conference call that the company is seeing “early signs” of growing confidence.
“We are seeing green shoots in some discretionary items such as apparel and electronics,” he said. “We know that Chinese consumers have the ability to spend, but their willingness to spend reflects their confidence in the future.”
The company’s domestic commerce arm Taobao and Tmall Group’s quarterly revenue rose 4% year-on-year on double-digit growth in order volume.
Alibaba’s domestic commerce revenue in recent quarters has beenP.D.D.) Pinduoduo Holdings and Douyin, which is owned by ByteDance.
“Taobao and Tmall’s strong GMV and order growth are particularly impressive given the challenges from competitors and market conditions,” said Jacob Cook, CEO of e-commerce consulting firm WPIC Marketing + Technologies.
The group reported revenue of 221.87 billion yuan for the three months ended March 31, compared with the consensus estimate of 219.66 billion yuan, according to LSEG data.
Analysts expect strong growth from Alibaba’s international digital commerce unit as it invests in building global market share and building global consumer demand for low-cost goods made in China.
According to LSEG data, the sector grew 45% compared to an expected 39% revenue increase. Losses nearly doubled to 4.1 billion yuan ($567 million) from 2.2 billion yuan ($567 million) in the same period last year, as the company made significant investments to maintain price competitiveness and shorten delivery times. It became.
In the group’s other “core” business, the cloud division, AI-related revenue from external customers, a relatively new business, recorded triple-digit growth year-on-year.
