ZTO Express, one of China’s leading express delivery companies has reported its financial results for the second quarter of 2024. In Q2 2024, ZTO’s revenues climbed 10.1% year-over-year to RMB10.73 billion (US$1.48 billion), driven primarily by a 10.1% increase in parcel volume. The company handled 8.45 billion parcels during the quarter, reflecting continued demand for express delivery services in China. However, ZTO’s market share fell to 19.6%, indicating intensifying competition in the sector.
ZTO’s adjusted net income rose 10.9% to RMB2.81 billion (US$386.1 million), outpacing revenue growth. The adjusted EBITDA margin improved slightly, reaching 40.5% compared to 39.9% in the same period last year.
ZTO’s strategic pivot towards quality over quantity appears to be paying off. The company reported a stable core express ASP (average selling price) of RMB1.24, despite industry pressures. This stability was achieved through an improved mix of non-e-commerce parcels and operational enhancements, offsetting the impact of volume incentives and declining average parcel weights.
Chairman and CEO Meisong Lai emphasized the company’s efforts to differentiate itself from competitors, particularly in brand recognition and customer satisfaction. ZTO’s focus on enhancing volume mix and improving last-mile delivery efficiencies seems aimed at strengthening its competitive position in the long term.
However, challenges remain. The express delivery industry in China continues to face intense competition and pricing pressures. ZTO’s decision to prioritize profitability over market share growth may pose risks if competitors aggressively pursue volume growth at the expense of margins.
Looking ahead, ZTO maintained its full-year 2024 volume growth guidance of 15% to 18%, suggesting confidence in its ability to navigate the current market dynamics. The company’s announcement of a US$0.35 per share interim dividend (representing a 40% payout ratio) signals financial health and a commitment to shareholder returns.
Source: ZTO Express
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