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BEIJING – China's e-commerce giant
Alibaba Group Holding
Ltd. reduced its full-year revenue forecast from 4% to 6%, citing growing doubts about the economy, as China's expansion had recently slowed to its slowest pace since almost 10 years.
In the midst of a trade dispute with the United States, consumers are tightening the limits of their purses for certain purchases. The slowdown is expected to affect sales of consumer durables and Alibaba has already experienced slower growth in consumer electronics, especially cell phones, said Vice President, Joe Tsai.
Other services such as meal deliveries should not be overly affected, Tsai said. Alibaba has seen continued growth in consumer staples, cosmetics and clothing, he said.
The Chinese economy is generally slowing in the midst of the controversy over trade with the United States. But Alibaba also faces stiff competition from Chinese online retailers, including
JD.com
and Pingduoduo Inc., said Steven Zhu, senior analyst at Pacific Epoch in Shanghai.
This slows the revenue generated by the ads that merchants place on Alibaba's platforms, he said, an extremely profitable segment of the Alibaba sector that allows Alibaba to grow beyond the trade in Alibaba. line.
"That's the main problem," he said.
Alibaba, listed on the New York Stock Exchange, manages the two largest online retail platforms in China, Taobao and Tmall, and its sales serve as a rough barometer of the Chinese consumer economy in a context of trade tensions growing with the United States.
Alibaba now expects to generate revenues of 375 billion yuan to 383 billion yuan (53.97 billion to 55.12 billion US dollars) in full year, the company said.
For the three months ended September 30, Hangzhou-based Alibaba revenue grew 54 percent year-on-year to 85.1 billion yuan, thanks to strong demand online Chinese consumers. But this remains lower than analysts' estimates – analysts surveyed by FactSet were expecting a turnover of 86.7 billion yuan. A year earlier, the company had a turnover of 55.1 billion yuan.
Net profit in the second quarter rose 13 percent to 20.0 billion yuan, nearly double the 10.6 billion yuan expected by analysts. A year earlier, it posted 17.7 billion yuan.
Revenue from Alibaba's main business unit, which manages Taobao and Tmall, grew by 56 percent to 72.5 billion yuan.
Earlier this week,
Baidu
Inc.
Another Chinese technology giant has warned that the loss of confidence in the Chinese economy could slow the revenue growth of the search engine operator.
Tencent Holdings
Ltd.
Baidu, Alibaba and Tencent are collectively known as BAT.
The second quarter results are the first earnings to be released after the announcement by Executive Chairman Jack Ma in September of his plan to retire in a year.
Ma said he expects trade with the United States to continue for a long time, if not 20 years, and that businesses in both countries will feel the effects.
Write to Yoko Kubota at [email protected]
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