Alibaba benefits from cost-saving measures as losses narrowed from Cainiao to e-commerce
- The e-commerce giant was able to grow its adjusted income by 19 per cent in the third quarter, even though sales rose only 3 per cent
- “Wide-ranging efforts in cost-reduction and efficiency-improvement measures are beginning to bear fruit,” said Alibaba CEO Daniel Zhang Yong
Chinese e-commerce giant Alibaba Group Holding has seen initial results in its bid to trim costs, its latest financial results and analysts’ comments showed.
The Hangzhou-based company, which owns the South China Morning Post, managed to grow its adjusted income by 19 per cent, despite a merely 3 per cent rise in revenue, according to its financial report released on Thursday.
As part of its cost-cutting measures, Alibaba slashed 1,797 jobs in the quarter ended September 30. It has reduced losses across the board: adjusted losses from its digital media and entertainment business, for instance, narrowed to 117 million yuan (US$16.4 million) from 931 million yuan a year ago.
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Cainiao, the company’s logistics arm, posted 125 million yuan in earnings, reversing a loss of 315 million yuan a year earlier.
Losses at Alibaba’s international commerce narrowed to 960 million yuan from 2.48 billion yuan a year ago, while earnings in its main e-commerce business rose 6 per cent, thanks to reduced losses in Taobao Deals, a discount-oriented shopping app designed to compete against Pinduoduo and Taocaicai, an online grocery service.
“The adjusted net income was much better than expected,” said Tsz Wang Tam, a Hong Kong-based equity analyst at DBS bank. “Revenue growth wasn’t very strong, but it was within expectations.”
Alibaba’s stock price in New York gained 7.8 per cent on Thursday on the back of the latest financial results and the company’s promise to expand a share buy-back plan. Alibaba shares in Hong Kong rose 2.2 per cent to close at HK$80 on Friday.