ZTO Express claims it has extended its leadership of the Chinese express parcels market after rapid growth last year with record revenues and profits, and wants to speed up even more this year.
In 2018, the Chinese company, which is listed on the New York Stock Exchange, increased revenues by 35% to RMB17.6 billion (US$2.6 billion) as volumes surged to 8.5 billion packages. Its net profit rose by 39% to RMB4.4 billion (US$638 million).
In the October – December quarter, which includes the massive peak generated by the Singles Day online sales festival on November 11, sales rose by 30% to RMB5.6 billion (US$818 million) as volumes soared by 35% to 2.7 billion packages. However, net profits improved by just 5% to RMB1.3 billion (US$186 million), suggesting high costs to handle peak volumes.
The company claimed that this dramatic volume growth was over 10 percentage points faster than the market (which thus grew about 25%), enabling it to increase its market share to 16.8% by the end of 2018.
Meisong Lai, Founder, Chairman and CEO, commented: "ZTO delivered a strong fourth quarter and closed out 2018 with a 1.3 percentage point increase in market share to 16.8%. We maintained our leadership position in the Chinese express delivery industry in terms of parcel volume, customer satisfaction and profit generation."
Commenting on general market trends, he added: "The Chinese express delivery industry continued to demonstrate healthy growth momentum with an increase of over 10 billion parcels in 2018. Fuelled by the steady expansion of the Chinese economy, the express delivery industry will further improve scale and efficiency allowing consumers to spend less for more with faster delivery and enabling adjacent industries to innovate in supply chain management.”
Looking ahead to 2019, Lai said: “We will accelerate our growth with a goal to increase our parcel volume 15 percentage points faster than the industry average to seize market opportunities and further expand our competitive lead. Through increased investments in infrastructure and technology, effective implementation of policies that reach the frontiers of our network, plus strategic placement and development of new product and services, we aim to achieve increase in quality of services, market share and profit generation, and ultimately deliver consistent and sustainable long-term value to our shareholders."
Based on the current market conditions and current operations, ZTO expects its parcel volume for 2019 to be in the range of 11.51 billion to 11.93 billion, representing a 35% to 40% increase year over year, while the adjusted net income is expected to be in the range of RMB4.8 billion to RMB5.2 billion, representing a 14.3% to 23.8% increase from the same period of 2018.
