Alibaba waives 2022 guidance citing COVID-19 risks as revenue growth slows

The brand of Alibaba Group is seen at its workplace in Beijing, China January 5, 2021. REUTERS/Thomas Peter

Could 26 (Reuters) – Alibaba Group (9988.HK), on Thursday stated it will not give a forecast for the present fiscal yr resulting from COVID-19 dangers because it reported its slowest quarterly income progress since going public in 2014.

The e-commerce big stated coronavirus resurgence in China, and lockdowns imposed to curb its unfold in Shanghai and different cities weighed on its enterprise by hindering retailers from transport items and making customers give attention to shopping for requirements.

“On-line bodily items GMV (gross merchandise worth) of our China retail marketplaces, excluding unpaid, noticed year-on-year decline within the low-teens proportion in April,” Chairman and CEO Daniel Zhang advised analysts on a post-earnings name.

April was the primary month of the primary quarter of Alibaba’s present fiscal yr and one when the COVID-19 curbs hit notably laborious.

“To provide you a way of the scope of affect – Primarily based on client handle, cities with new COVID circumstances in April represented greater than half of our China Retail Marketplaces GMV,” Zhang stated, including that Alibaba’s key provide chain and logistics hubs had been additionally affected.

Whereas supply providers resumed in Could, they had been taking time to totally get better resulting from elements comparable to parcel backlogs, the corporate stated.

Alibaba stated in an announcement it believed it was “not prudent” to provide monetary steering for the yr forward given COVID-19-related dangers outdoors of its management and which had been “tough for us to foretell.”

SLOWING ECONOMY

The corporate reported income rose 9% to 204.05 billion yuan ($30.35 billion) within the January-March quarter – the slowest rise since its itemizing, however forward of analyst estimates, and prompted its U.S.-listed shares to rise by over 10%.

Alibaba stated rising demand at Chinese language commerce items comparable to Tmall Grocery store and Freshippo in addition to area of interest procuring platforms comparable to Taobao Offers and Taocaicai helped enhance gross sales. Analysts on common had anticipated income of 199.25 billion yuan, in response to Refinitiv information.

COVID-19 lockdowns have prompted some analysts to downgrade their financial progress forecasts for China this yr and companies from retailers to chipmakers have in latest weeks warned of sluggish gross sales as native customers curb spending. learn extra

Though its strategy appears to be like more and more out of step with the remainder of the world, Beijing has vowed to stay with its zero-COVID coverage, saying that enjoyable curbs might trigger a excessive variety of deaths and overwhelm its medical system.

However in an indication of its rising concern concerning the financial fallout, Premier Li Keqiang on Wednesday promised steps to carry the economic system again on observe.

Citing the assembly, Zhang stated the Chinese language authorities had despatched “essential coverage indicators” on its dedication to stabilize the economic system and that Alibaba needed to help these efforts.

Aequitas Analysis analyst Ming Lu forecast fairly a weak June quarter for Alibaba however gradual restoration within the second half of the yr because of possible easing of the lockdowns

BEATS ESTIMATES

Buyers have additionally been jittery over the long-term outlook for Alibaba and its friends due to a regulatory crackdown on the tech trade and have been on the lookout for indicators that the worst is perhaps over.

Requested about this on the decision, Alibaba executives stated they believed that authorities had delivered a “clear” message that they recognised the financial significance of platform corporations like Alibaba and had been dedicated to their wholesome improvement.

Income in Alibaba’s cloud computing division rose 12% to 18.97 billion yuan within the reported quarter. On the core commerce unit, its largest, income rose 8% to 140.33 billion yuan.

Annual lively customers on its platforms reached about 1.31 billion for the fiscal yr, together with over 1 billion customers in China for the primary time.

On an adjusted foundation, the corporate earned 7.95 yuan per share, above the 7.31 yuan estimate.

Ant Group, Alibaba’s fintech affiliate, reported a revenue of about 22 billion yuan for the quarter ended December, in response to Alibaba’s filings on Thursday, in contrast with 21.76 billion yuan a yr in the past.

Alibaba additionally stated that it acquired a 3.9 billion yuan dividend from Ant Group, the primary time the fintech conglomerate has paid out one.

($1 = 6.7240 Chinese language yuan renminbi)

Reporting by Nivedita Balu in Bengaluru; Enhancing by Anil D’Silva and Tomasz Janowski

: .