Chinese Baidu warns of economic slowdown

This is another sign that the world's second largest economy is facing headwinds in its trade dispute with the United States. Baidu's business, driven by announcements from Chinese companies in the medical, retail and other sectors, is a barometer of China's health. private sector.

"On the possible massive current slowdown, what we are saying is that the level of confidence of the private sector, entrepreneurs, is not as high," said Baidu's general manager, Robin Li, analysts at the publication of the third quarter results. Tuesday in New York.

"If, say, over the next two months, the confidence level changes, things will change in the right direction," said Mr. Li. "But we do not know exactly what will happen."

For the third quarter ended September 30, Baidu beat analysts' estimates and posted a turnover of 28.2 billion yuan, or $ 4.11 billion, up 27% over the same period last year. The growth is due in part to the increase in the number of users and the time spent applying Baidu, said the company. Analysts surveyed by FactSet forecast revenue of $ 4.03 billion.

Its quarterly net profit was 12.4 billion yuan, up 56% over the previous year.

But Baidu said revenue growth is expected to slow down by the end of the year. Fourth quarter sales are forecast to increase by 15 to 20 percent over the same period last year, compared to the 27 percent increase between July and September.

Baidu's US deposit revenue rose 0.9% to $ 183.37 on Tuesday, losing 0.75% after the release of the results. Shares are down more than 20% since the beginning of the year, along with other Chinese tech giants.

Li said that while the current period may have been a reminder of the global financial crisis a decade ago, it was looking differently. "Right now, it's more about the traditional industry, the confidence of entrepreneurs and it can change very quickly," he said. "In the longer term, I am still very optimistic about the future of Baidu and the future of China."

China's economic expansion slowed at its weakest pace since the financial crisis. The official indicator of Chinese manufacturing activity reached its lowest level in more than two years in October.

Raymond Feng, an analyst at the Pacific Epoch firm in Shanghai, said that while the macroeconomic impact is already weighing on the Chinese advertising market, online advertising is a bit safer than traditional ads.

Nevertheless, given the macroeconomic slowdown and emerging competitors, including new online video platforms, Baidu is expected to face fiercer competition in online advertising, he said.

Tightening regulations in various sectors of the Chinese government is another factor that could weigh on the company's bottom line, said Herman Yu, chief financial officer of Baidu.

Policies affecting sectors such as video games, real estate, financial services and e-commerce could affect customers who advertise on Baidu's platforms, Yu said during the call. benefit. Although Baidu is not dependent on any particular sector for advertising, the cumulative impact on several sectors, he said, "a few here and there, combined, makes sure that our growth is not probably not as fast as we would have liked before "

In the video game industry, regulators have not approved the sale of new titles since March, when a reorganization of the government began. Uncertainties remain as to which body will regulate the sector.

-Micah Maidenberg in New York contributed to this article.

Write to Yoko Kubota at [email protected]