What’s new: China’s largest food-delivery company Meituan swung to a net loss in the last quarter 2020 despite a record growth in revenue, reflecting heavy spending as the company expands into new business arenas.
Revenue climbed in 2020’s final quarter at its fastest pace in a year, to a better-than-expected 37.92 billion yuan ($5.8 billion), according to Meituan’s earning report released Friday. But the company posted a net loss of 2.2 billion yuan after two consecutive quarters of profit and versus profit of 1.46 billion yuan in the same quarter a year earlier.
Revenue for the full year rose to 114.8 billion yuan in 2020, an 18% rise from 2019. Net profit for the year increased to 4.7 billion yuan, more than doubled from 2.2 billion yuan in 2019.
What’s the context: The quarterly loss mainly reflected Meituan’s push into burgeoning initiatives like community group buying that has flourished in China during 2020.
Operating losses from new initiatives in 2020 surged to 10.9 billion yuan from 6.7 billion in 2019, Meituan said. The company predicted that it may continue to report overall operating losses in the next few quarters.
Chief Executive Officer Wang Xing said Meituan Select, the community group buying business, is a “top priority” for the firm. But the business faces intense competition from rivals including Pinduoduo Inc. and Didi Chuxing.
Contact reporter Han Wei (weihan@caixin.com)
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