China's Meituan reports third quarterly loss, warns on antitrust fines
Reuters
Published Aug 30, 2021 04:44AM ET
Updated Aug 30, 2021 09:00AM ET
BEIJING (Reuters) -Chinese food delivery giant Meituan warned it could be required to pay "a significant amount" of antitrust fines and posted a third consecutive quarterly loss on Monday as it continued to invest in expanding its various businesses.
Meituan, China's eighth largest company by market value, has faced regulatory heat as authorities crack down on the country's sprawling platform economy.
China's State Administration of Market Regulation (SAMR) launched an antitrust probe into the company in April, focussing on forcing restaurants and other merchants to use its platform exclusively.
SAMR also said on Monday it would further regulate the sharing economy sector and that it has been investigating Meituan not reporting its acquisition of bike-sharing startup Mobike in 2018 for antitrust review.
Meituan said in its earnings report that it was actively cooperating with SAMR in the ongoing investigation and that it could be required to "make changes to its business practices and/or be subject to a significant amount of fines".
The Tencent-backed company reported a 2.21 billion yuan ($341.8 million) loss in the April-June period versus a profit of 2.72 billion yuan a year earlier.
It has been expanding aggressively into hotel booking and community group-buying, taking on such rivals as Alibaba (NYSE:BABA) and Pinduoduo (NASDAQ:PDD).
Meituan said its total revenue rose 77% in the quarter from a year earlier to 43.76 billion yuan.
That compared with a 42.32 billion yuan average estimate of 15 analysts compiled by Refinitiv.
Revenue in Meituan's core food delivery business rose 59% year-over-year to 23.13 billion yuan.
In July, a set of guidelines announced by SAMR required food delivery platforms to guarantee their workers with insurance, causing investor concerns about the rising cost of employing riders.
The company will strictly follow the guidelines, Wang Xing said on a conference call, adding Meituan will introduce "compulsory breaks" for delivery riders.
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Meituan will implement the government's pilot programme for occupational injury insurance for flexible workers as early as this third quarter, according to a recent report by China Merchants Securities.
($1 = 6.4656 Chinese yuan renminbi)
Written By: Reuters
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