March 30, 2020 / 10:18 AM / 3 months ago

UPDATE 2-Food deliverer Meituan Dianping sees Q1 loss due to coronavirus

* Loss follows sustained profits

* Faces competition from Alibaba-backed Alipay (Adds CEO, analyst quotes, competition background)

By Yingzhi Yang and Brenda Goh

BEIJING, March 30 (Reuters) - Chinese food delivery giant Meituan Dianping said it expected to post a first quarter loss after the coronavirus lockdown led to a drop in orders and said it was too early to judge the impact on revenues for the rest of this year.

“Due to the high uncertainty of the evolving situation, we are unable to fully ascertain the expected impact on full year 2020 at this stage,” Meituan said in its earnings statement on Monday.

Meituan, which is backed by gaming major Tencent Holdings Ltd, for the fourth quarter ended December, posted a 42.2% jump in revenue to 28.16 billion yuan ($3.97 billion), beating market expectations. Analysts expected revenue of 26.72 billion yuan, according to Refinitiv I/B/E/S data.

Profit was 1.46 billion yuan - its third consecutive quarter of profit since listing in September 2018 - as gross transaction volume in its core food delivery division rose 40%.

Businesses have been severely hurt by supply disruptions and a shortage of drivers and delivery people because of the novel coronavirus.

The local service business was severely impacted, Wang Xing, chairman and chief executive of Meituan, said in a conference call.

But he said he was confident for the longer term despite “the short-term setbacks”.

Meal orders in February, the worst month of the outbreak in China, were just over a quarter of normal levels, brokerage Bernstein said.

Still, grocery deliveries in the the early stage of the outbreak jumped an estimated 400% as consumers ordered essential supplies online, analysts said..

“It’s quite understandable that food delivery, in-store dining, and hotel bookings are all adversely impacted,” David Dai, an analyst at Bernstein Research, said. “Investors will focus on the recovery of the industry...which we are very positive on.”

Apart from contending with the impact of the virus, Meituan faces increasing competition from e-commerce leader Alibaba Group Holding Ltd. Alibaba-backed Alipay in March started to team up with more third-party vendors to offer services in food, retail and healthcare.

Meituan’s Hong Kong-listed shares have fallen 12.4% so far this year as the coronavirus outbreak roiled global markets, while the broader Hang Seng index has fallen 16.7%. ($1 = 7.0899 Chinese yuan renminbi) (Reporting by Yingzhi Yang in Beijing and Brenda Goh in Shanghai; Additional reporting by Josh Horwitz; Editing by Christopher Cushing, Louise Heavens and Barbara Lewis)

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