22-05-2025
ZTO Express (Cayman) Inc (ZTO) Q1 2025 Earnings Call Highlights: Navigating Growth Amidst ...
Parcel Volume: RMB8.5 billion, up 19.1% year over year.
Adjusted Net Income: RMB2.3 billion, increased 1.6% year over year.
Total Revenue: RMB10.9 billion, up 9.4% year over year.
ASP for Core Express Delivery: Decreased 7.8% or RMB0.11.
Total Cost of Revenue: RMB8.2 billion, increased 17.9%.
Gross Profit: RMB2.7 billion, decreased 10.4%.
Gross Profit Margin: 24.7%, decreased 5.4%.
Income from Operations: RMB2.4 billion, increased 6.1%.
Operating Cash Flow: RMB2.4 billion, increased 16.3%.
Capital Expenditure: RMB2 billion for Q1.
2025 Full-Year Parcel Volume Guidance: RMB40.8 billion to RMB42.2 billion, a 20% to 24% increase year over year.
Warning! GuruFocus has detected 1 Warning Sign with ZTO.
Release Date: May 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
ZTO Express (Cayman) Inc (NYSE:ZTO) achieved a 19.1% year-over-year increase in parcel volume, reaching RMB8.5 billion in the first quarter of 2025.
The company reported an adjusted net income of RMB2.3 billion, marking a 1.6% increase year over year.
Retail parcel volume increased by 46% year over year, with reverse logistics volumes surging over 150%, indicating strong growth in these segments.
ZTO Express (Cayman) Inc (NYSE:ZTO) successfully decreased unit transportation and sorting costs by RMB0.09 year over year through digitization and accountability metrics.
The company maintained strong corporate cost efficiency, with SG&A expenses as a percentage of revenue decreasing to 4.7%.
The ASP for core express delivery business decreased by 7.8% due to intensified competition, impacting revenue.
Gross profit decreased by 10.4% to RMB2.7 billion, and the gross profit margin rate decreased by 5.4% to 24.7%.
Price competition in the express delivery industry intensified, putting pressure on profit margins.
The proportion of lower value parcels increased, further intensifying price competition and impacting revenue growth.
Despite efforts to narrow the gap, ZTO Express (Cayman) Inc (NYSE:ZTO) was slightly slower than the industry in volume growth during the first quarter.
Q: How does ZTO plan to achieve its volume growth target despite intense competition, and what are the implications for profit? A: (Huiping Yan, CFO) ZTO aims to maintain service quality while focusing on volume leadership and reasonable profit. The company has narrowed the gap between its volume growth and the industry average by incentivizing network partners. ZTO continues to focus on upgrading its revenue structure, particularly in retail and reverse logistics, which saw significant growth. The company plans to deepen cooperation with e-commerce platforms to sustain this growth.
Q: What are the expectations for unit revenue and cost, and how is AI being integrated into ZTO's operations? A: (Huiping Yan, CFO) The decline in unit revenue is due to intense competition and an increase in lower-weight parcels. ZTO is focusing on cost efficiency, with significant reductions in transportation and sorting costs. AI is being used in sorting operations, route planning, and order allocation to improve efficiency and reduce errors. ZTO plans to further explore AI applications in last-mile delivery and other areas.
Q: What progress has been made in direct linkage and cost optimization, and what are the expectations for the upcoming shopping festival? A: (Huiping Yan, CFO) ZTO is optimizing outlet layouts and promoting direct sorting and delivery to reduce last-mile costs and increase outlet earnings. The company expects significant cost savings and improved network partner earnings. For the upcoming shopping festival, ZTO anticipates high parcel volumes and plans to maintain competitive pricing while supporting network stability.
Q: How does ZTO plan to handle the intensified price competition and its impact on ASP? A: (Huiping Yan, CFO) ZTO is focusing on maintaining high service quality and strategically adjusting pricing based on market conditions. The company is leveraging its cost efficiency initiatives to offset pricing pressures and plans to continue optimizing its revenue mix to sustain profitability.
Q: What are ZTO's strategic priorities in response to current market challenges? A: (Meisong Lai, CEO) ZTO's strategic priority is to solidify its leadership in quality and scale while achieving reasonable profit levels. The company is committed to sustainable growth, reinforcing its network stability, and leveraging technology to enhance operational efficiency. ZTO aims to build an enduring enterprise that can adapt to changing market dynamics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
