BRIEF: ZTO’s first-quarter profit rises 6.3% on higher pricing and volume

Logistics company ZTO Express (Cayman) Inc. (2057.HK; ZTO.US) announced on Monday that its first-quarter net profit rose 6.28% year-on-year to 2.12 billion yuan ($311 million), supported by continued parcel volume growth and improved per-parcel pricing. Its adjusted net profit increased 5.2% to 2.38 billion yuan.

The company’s revenue grew 22% year-on-year during the quarter to 13.28 billion yuan, with core express delivery service revenue rising 22.5%, mainly driven by a 13.2% increase in parcel volume and an 8.2% increase in average parcel pricing. Total parcel volume reached 9.67 billion units, outpacing the average industry growth rate by 7.4 percentage points, the company said.

ZTO founder and Chairman Lai Meisong said the company continued to focus on service quality, customer satisfaction and fairness in network policies during the quarter. He added that strong growth in key account customers and faster expansion in non-e-commerce parcel business helped improve the company’s revenue mix and overall profitability.

During the period, the company’s transportation and sorting cost per parcel declined by 0.06 yuan year-on-year, benefiting from economies of scale and improved route planning efficiency. However, its gross margin edged down to 24.4% from 24.7% a year earlier, while operating profit rose 5.8% to 2.55 billion yuan.

ZTO’s stock opened higher on Wednesday in Hong Kong but later turned lower, closing at HK$168.4 by the midday break, down 6.44%. The stock has gained about 12% over the past six months.

By Lee Shih Ta

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