ZTO Express rose more than 11% in pre-market trading, with Q1 adjusted net profit increasing by 15.8% year-on-year and parcel volume increasing by 13.9% year-on-year | Financial Report News

On Thursday, ZTO Express released its first-quarter financial report. The report shows that the company's net profit decreased by 13.0% year-on-year during the reporting period, but parcel volume increased by 13.9%.

Specifically, ZTO Express achieved a first-quarter revenue of RMB 9.96 billion, a year-on-year increase of 10.9%.

Among them, core express service revenue increased by 11.0% year-on-year, driven by a 13.9% increase in parcel volume and a 2.5% decrease in unit price. Due to a shift in service mix towards higher value customers, revenue from direct service to corporate clients (including delivery fees) decreased by 7.1%.

Revenue from freight agency services increased by 5.2% compared to the same period in 2023, while material sales revenue grew by 31.5%, mainly from the sale of thermal paper required for printing electronic waybills, with other revenue mainly coming from financial services.

Gross profit reached RMB 3.002 billion, a 19% year-on-year increase. Net profit was RMB 1.447 billion, a 13.0% year-on-year decrease. Adjusted net profit reached RMB 2.224 billion, a 15.8% year-on-year increase.

Basic and diluted earnings per ADS were RMB 1.77 and 1.75 respectively, representing a 14.5% and 13.8% year-on-year decrease.

In terms of operational data, ZTO's parcel volume in the first quarter reached 7.171 billion pieces, a 13.9% year-on-year increase. As of March 31, 2024, the number of pick-up/delivery points exceeded 31,000, the number of direct network partners exceeded 6,000, and the number of self-owned trunk vehicles was approximately 10,000.

ZTO's founder, chairman, and CEO Lai Meisong stated:

In the first quarter of this year, the industry's parcel volume increased by 25.2% year-on-year, driven by the vigorous development of new live-streaming e-commerce and social platforms, leading to an increase in the proportion of low-priced e-commerce parcels.

Faced with intense price competition, the company adheres to the principle of "no loss-making express delivery". Although the market share of parcel volume has decreased compared to the same period last year, the market share of profit has further increased.

ZTO's CFO, Ms. Yan Huiping, pointed out:

Core unit revenue decreased by 2.5% year-on-year, equivalent to 4 cents. Despite the decrease in core unit revenue, due to the deepening of standardization and digital operation, unit costs have decreased, leading to growth in adjusted net profit and operating cash flow.

Regarding performance outlook, ZTO expects industry growth to be between 15-20%, and based on the principle of no loss-making express delivery, is willing to accept a certain range of market share decline. It maintains the guidance for the previous year's business volume of 34.73 billion to 35.64 billion pieces, with a growth rate of 15%-18%.

After the financial report was released, ZTO's US stock rose more than 11% in pre-market trading