By Casey Hall
SHANGHAI (Reuters) -China’s Meituan on Tuesday said it expects fourth-quarter revenue growth for its core food delivery business to slow versus the preceding quarter, as persistent consumer caution and warmer weather for the winter season hits orders.
Deliveries will also likely decline versus the same period last year, Meituan Chief Financial Officer Chen Shaohui said, as demand in the fourth quarter last year was helped by customers still grappling with curbs on movement caused by China’s COVID policy, placing larger orders over longer distances.
He said he expects a similar trend for its non-food delivery service Meituan Instashopping.
“We are stepping up our marketing efforts to stimulate demand in the current consumption environment,” he said, adding that this would include higher subsidies.
The comments come as demand in the world’s second-largest economy remains lacklustre, with China’s post-pandemic economic recovery losing steam in recent months. Meituan CEO Wang Xing previously flagged a tougher third quarter for the food delivery business due to macroeconomic headwinds.
Asked about whether the company will consider a share buyback, Wang said the company’s board had authorised one of up to $1 billion. However, a buyback would depend on Meituan’s cash position due to plans to invest in new initiatives and explore overseas investments, he said.
Shares in Meituan, China’s largest food delivery provider ahead of Aliaba’s Ele.me, have fallen to their lowest level since 2020, having declined 5.2% on Tuesday before its earnings.
The platform, whose app provides services such as bike sharing, ticket booking and maps, earlier in the day posted a bigger-than-expected 22.1% rise in third-quarter revenue to 76.47 billion yuan ($10.69 billion) versus 62.62 billion yuan in the same period a year earlier.
The result compared with the 75.59 billion average of 15 analyst estimates compiled by LSEG.
Meituan posted a profit of 3.59 billion yuan versus profit of 1.22 billion yuan a year earlier.
Quarterly revenue from core local commerce, which includes food delivery as well as Meituan Instashopping, rose 24.5% to 57.69 billion yuan.
Revenue from in-store, hotel booking, and travel sector businesses benefited from a domestic travel rebound over the summer with transaction volume rising 90% year on year.
Meituan in May expanded beyond mainland China to Hong Kong with new food delivery business KeeTa, and is reportedly eyeing further international expansion, possibly to Southeast Asia.
(Reporting by Casey Hall; Additional reporting by Brenda Goh; Editing by Christopher Cushing, Edmund Klamann and Mark Porter)