Chinese online services giant, Meituan Dianping, reported a slight drop in its profits for the first quarter of this year. The operators of the world's largest on-demand service provider attributed the decline to the continued disruptions on its businesses across the country due to the coronavirus pandemic.
During the company's conference call with analysts on Monday, Meituan Dianping's founder and chief executive officer, Wang Xing, warned stakeholders that there could be further disruptions to its businesses in the coming quarters. He added that most of its local services merchants are still struggling to get back on their feet following the months of reduced demand amid the government imposed lockdowns and restrictions.
Meituan Dianping assured its stakeholders that it is doing everything it can to support its merchants. Apart from providing significant financial support, the company is also working to provide digital solutions to bolster its merchants' operational efficiency. Through its partners, Meituan Dianping provides a wide variety of services from selling vouchers for local services, food delivery, retail services, consumer reviews, and group buying offers similar to Groupon.
For its first quarter ended March 31, Meituan Dianping posted total revenues of 16.7 billion yuan or roughly $2.3 billion. This was a 12.6 percent drop from the 19.2 billion yuan it had reported over the same period last year. The figure still managed to beat analysts' estimates of 15.6 billion yuan for the quarter. Net Loss for the quarter increased to 1.6 billion, above its 1.4 billion net loss over the same period last year.
Despite its relatively weak performance for the quarter, investor confidence in the company's stock still proved strong. The company's share prices ended up 6.1 percent higher on Monday, closing at HK$125.80 per share in Hong Kong. Since the start of the year, the company's share prices have increased by over 23 percent.
While most businesses have hunkered down and restricted their spending, Meituan Dianping has moved ahead with its expansion plans. The company, which is heavily backed by Chinese tech giant Tencent Holdings, has expanded its business to include ride-hailing services, online groceries, and restaurant management. Wang stated on Monday that the company will also be moving ahead with its planned investment in autonomous delivering technologies such as self-driving electric delivery trucks.
Meituan Dianping's outlook for the coming quarters has remained conservative, claiming that the disruptions to its merchant's businesses could continue to through the rest of the year. However, analysts have pointed out that the company's business could immediately rebound in the second half of the year as consumer spending and demand increase after the economy emerges from the restrictions.
