SHANGHAI - ZTO Express (Cayman) Inc. (NYSE:ZTO) reported second-quarter earnings that surpassed analyst expectations, driving shares up 3% in after-hours trading. The Chinese express delivery company saw robust growth in parcel volume and adjusted net income despite intense competition in the industry.
ZTO Express reported adjusted earnings per American depositary share (ADS) of RMB3.38 ($0.47), beating the analyst estimate of RMB3.12. Revenue for the quarter came in at RMB10.73 billion ($1.48 billion), slightly above the consensus estimate of RMB10.67 billion and up 10.1% YoY.
The company's parcel volume increased 10.1% YoY to 8,452 million parcels, while adjusted net income rose 10.9% to RMB2.81 billion ($386.1 million). However, ZTO's market share decreased by 2.0 percentage points to 19.6% as the company prioritized quality over quantity.
"We continued to advance our re-balanced strategy that prioritizes quality over quantity by enhancing volume mix, improving operational efficiencies, helping to reduce last mile delivery costs, and increase profitability for outlets and couriers," said Meisong Lai, Founder, Chairman and CEO of ZTO Express.
The company maintained its 2024 volume growth guidance of 15% to 18%. ZTO Express aims to double its retail volume by the end of the year, differentiating itself from competitors in brand recognition and customer satisfaction.
"On full year basis, we estimate parcel volume to grow at about 15% YoY, with ASP to decline by about 2% YoY in 3Q/4Q. Adjusted earnings is expected to exceed RMB10bn," Jefferies analysts said in a note.
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