ZTO EXPRESS SEES DEMAND NORMALIZING IN CHINA

Shanghai-based ZTO Express said express delivery operations in China is already back to normal with parcel volumes ticking up boosted by domestic consumption and e-commerce.

 

The express delivery company in China reported its revenues dropped 14.4% to US$553 million in the first quarter, as its net income dived 45.6% to US$52.4 million year-on-year. 

 

However, although adversely affected by the COVID-19 outbreak, the company said it delivered 4.9% volume growth to reach 2.4 billion parcels from the same period last year.

 

"ZTO's overall results for the quarter were satisfactory. The entire country faced challenges brought by COVID-19 outbreak and made tremendous effort and sacrifices. Express delivery business as a whole was able to return to normal operations ahead of many other industries," said Meisong Lai, founder, chairman and CEO of ZTO.

 

He added that ZTO saw its daily volume in the first half of May reached a record high and peaked over 50 million parcels.

 

Domestic consumption, e-commerce

 

"Chinese domestic consumption and particularly, innovations in e-commerce is rapidly transforming the Chinese economy and augmenting the traditional distribution channels.  The time and spatial distance between consumers and the origins of goods and services are compressing," Lai said, noting, however, that competition is likely to further escalate but "the industry growth prospects remain positive."

 

ZTO also managed to increase its market share during the period. Huiping Yan, chief financial officer of ZTO said it slightly grew its market share by 0.3 points to 18.9% "due to the orderly recovery in operations as well as healthy growth in e-commerce spending since March."

 

"Statistics showed that e-commerce growth led the retail spending, and express delivery industry at the forefront acting as a catalyst. Our parcel volume has surged to a new level and we must recalibrate capacity investment and output efficiencies while navigating through a highly competitive landscape," Yan noted.

 

Outlook remains positive

 

Overall, ZTO said even though there still exist uncertainties in the economic development worldwide due to the COVID-19 crisis, the management maintains an "optimistic outlook" and is "confident in delivering positive top and bottom-line growth for the entire year."

 

The company targets to achieve an annual parcel volume between 15.9 billion to 16.4 billion for 2020, representing a 37% to 42% increase for the combined last three quarters of the year.