China Food Delivery Leader Meituan Sees 1st-Qtr Loss As Coronavirus Slams Merchants

Meituan Dianping, the big food delivery and consumer service platform that has thrived with China’s e-commerce boom, warned on Tuesday that it would report a loss for the first quarter amid “severe disruptions” to restaurants and other business partners in connection with the coronavirus pandemic.

“Business segments such as food delivery and in-store, hotel and travel are all facing significant challenges on the demand side and supply side,” the company said in a statement. “As a result of the pandemic, we estimate that we would experience negative year-over-year revenue growth and (an) operating loss for the first quarter of 2020.”

Meituan also warned of uncertainty that makes full-year results difficult to predict. “Due to the high uncertainty of the evolving situation, we are unable to fully ascertain the expected impact on full year 2020 at this stage; however, if it takes longer for user demand and merchant operations to recover to normal levels as the pandemic continues, the results of our operations for the following quarters could also be adversely impacted,” Meituan said.

The warning marks a setback after profitability improved in 2019.  Operating profit turned positive for the first time in its history, reversing to a 2.7 billion yuan, or $386 million, from a loss of 11.1 billion in 2018. Revenues increased by 49% year-over-year to 97.5 billion yuan. Click here for details.

The fallout from the coronavirus has hit Meituan’s merchants hard, Meituan said. “Since the beginning of 2020, the coronavirus outbreak has resulted in tremendous near-term shocks to many industries in China. Local services, which are the focus of our e-commerce platform, have been impacted by this pandemic in many ways. Especially, the pandemic has already caused severe disruptions to the daily operations of our merchants, including restaurants, local services merchants and hotels, which in turn resulted in downward pressure on our own operations for the first quarter of 2020,” the company said.

Meituan’s Hong Kong-traded shares have lost nearly 23% of their value since mid-January yet remain  more than 66% higher than a year ago.  CEO Wang Xing, a co-founder, is worth $7.4 billion on the Forbes Real-Time Billionaires List today.  The company, worth $65.6 billion based on yesterday’s market cap, does business in more than 2,800 cities and counties in China. China rivals include Trip.com, one of the world’s travel business, whose shares have also slumped amid travel restrictions that have stunted air and hotel bookings.

–Follow me @rflannerychina