Pandemic cuts into Q1 earnings for Meituan Dianping

Food delivery and lifestyle service giant Meituan Dianping said revenue fell 12.6 percent to 16.75 billion yuan (US$2.36 billion) in the first quarter after its core business was affected by lockdown conditions.

The company's net loss widened to 1.58 billion yuan, from 1.43 billion yuan a year earlier, after turning profitable during the last three quarters in 2019.

The daily average number of food delivery transactions decreased by 18.2 percent, while average value per order increased by 14.4 percent.

The company's food delivery business recorded an operating loss of 70.9 million yuan, compared with an operating profit of 482.8 million yuan in the previous quarter.

“We expect that factors including the ongoing pandemic precautions, consumers’ insufficient confidence in offline consumption and the risk of merchant closure in the remainder of the year would continue to have a potential impact on our business performance,” it said in a stock exchange filing.

Revenues from new initiatives and other segments, including bike-sharing, car-hailing and B2B food distribution, increased 4.9 percent to 4.2 billion yuan.

Daily food delivery volumes rose to about 90 percent of pre-pandemic levels in mid-May amid easing quarantine measures.

Other out-of-home segments such as hotel booking, travel and in-store service businesses were still lagging behind food delivery as cautious sentiment persists.

"We will not decrease our investment for long-term growth, just because we are facing business disruption and challenges in the short term," Chief Financial Officer Chen Shaohui said during an earnings call.

BoCom International said in a research note that Meituan's major revenue driver will be a higher ad monetization rate for food delivery and the attraction of high-quality branded restaurants during the pandemic provides a strong advertising growth outlook.