Meituan returns to profit in Q2 as China food delivery price war cools
Quick Look
- Meituan reported an adjusted net profit of 2.5 billion yuan in Q2, ending a three-quarter losing streak as China's food delivery price war eased, allowing reduced subsidies and a shift to higher-value customers.
- Revenue rose 14.4% year-on-year to 105 billion yuan, beating estimates.
AI-generated summary
Why It Matters
Meituan had been losing money for three consecutive quarters due to intense competition in China's food delivery market, where rivals like JD.com and Alibaba used aggressive subsidies to gain market share.
On-demand delivery giant Meituan swung back to profitability in the second quarter as China’s price war in food delivery cooled, allowing the company to scale back subsidies and target higher-value customers.
Beijing-based Meituan posted an adjusted net profit of 2.5 billion yuan (US$372 million) for the June quarter, snapping a three-quarter losing streak according to its earnings report on Friday. The figure beat average analyst forecasts of 340 million yuan compiled by Bloomberg.
Revenue rose 14.4 per cent year on year to 105 billion yuan, beating the consensus estimate of 101 billion yuan.
Revenue and adjusted net loss for the first half came in at 196 billion yuan and 2.4 billion yuan, respectively.
Meituan’s Hong Kong-listed shares closed flat at HK$77.50 on Friday ahead of the earnings announcement.
The latest results come amid Meituan’s effort to curb promotional spending following a year of intense competition with rivals including JD.com and Alibaba Group Holding, which had used aggressive subsidies to capture market share. Alibaba owns the South China Morning Post.
What to Watch
AI outlook — possibilities, not facts
Meituan will maintain profitability in the second half of the year if the food delivery price war remains contained
Likely · Within months
Open Questions
- How sustainable is Meituan's shift to higher-value customers?
- Will rivals respond with renewed subsidy wars?
- What is the long-term outlook for profitability in China's food delivery sector?
