China's Temu owner sees profit plunge as trade tensions linger
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Chinese ecommerce giant PDD Holdings saw net profit almost halve in the first three months of the year as the Temu owner prepared for a blistering trade war between Beijing and Washington.The Shanghai-based company said net profit came in at 14.7 billion yuan ($2 billion) in the three months ending March 31, down 47% year on year.The drop came as the economic superpowers are locked in another bruising trade standoff that saw US President Donald Trump last month scrap a customs exemption for goods valued under $800.The exemption was long a vital part of the business model supporting platforms offering low-cost goods like Temu.In a statement with the earnings release on Tuesday, PDD Holdings' co-chief executive Lei Chen said the company made "substantial investments...to support merchants and consumers" and deal with "rapid changes in the external environment"."These investments weighed on short-term profitability but gave merchants the room to adapt", he said, insisting they were focused on "strengthening the (platform's) long-term health".The firm also saw revenue growth slow for a fourth straight quarter.It said revenue in the first quarter rose 10% on-year to 95.7 billion yuan.But that was down on the 24% growth recorded in the previous three months -- and a severe drop from the 131% growth it saw at the start of 2024.The growth slowdown was "expected", said PDD Holdings' vice president of finance Jun Liu, adding that the downturn was "accelerated by the changes in the external environment".She warned that the company's financial results "may continue to reflect the impact of sustained investments... through uncertain times".PDD's New York-listed depository receipts plunged more than 13%.As part of a detente in the tariff standoff between China and the United States, Trump signed an executive order this month that set duties on "de minimis" items sent through the US Postal Service to 54% of their value, or a $100 payment.A prior tariff had been set at 120%.
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