Indonesia’s J&T turns first profit in China as it weathers logistics price war

Asian logistics group J&T Global Express reported its first annual profit in China after a big expansion push last year, despite an escalating industry price war in its first earnings report since going public in Hong Kong in October.

The company recorded a gross profit of US$58.8 million and adjusted earnings before interest, taxes and amortisation of US$30.7 million in China last year, the first positive results for both since it entered the market four years ago, according to the earnings report released on Friday.

Average revenue per parcel fell 4.3 per cent last year to 9.1 yuan, according to data from the State Post Bureau.

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J&T said its own revenue per parcel remained stable in 2023, as it managed to decrease per-parcel delivery costs to US$0.34 from US$0.40 in 2022. It attributed the improved results to “a series of initiatives including strategic acquisition, service offering diversification and streamlined operation”, according to the earnings report.

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The market now makes up the majority of its revenue. Sales in China increased 27.7 per cent to US$5.2 billion in 2023, accounting for 59.1 per cent of its total revenue. The ratio has risen from 45 per cent in 2021 to 56 per cent in 2022, according to its official reports.

The number of parcels it handled in the country last year jumped 27.6 per cent to 15.3 billion, giving it an 11.6 per cent market share. It is the sixth-largest express delivery company in China.

J&T raised HK$3.5 billion in its October initial public offering in Hong Kong, making it the city’s second-largest IPO of the year.

“In China, our focus will be on further uplifting service quality and brand image to reach a broader base of high-quality customers,” the company said in its press release on Friday.

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Even as business improves in China, J&T’s global business has seen greater headwinds.

The company as a whole reported a net loss of US$1.2 billion because of higher share-based payments and expenses. It had a net profit of US$1.6 billion in 2022. Total revenue last year rose 22 per cent to US$8.8 billion.

J&T, known for its low-cost logistics services, was the top express delivery service provider last year in Southeast Asia, where it held a 22.5 per cent share of the market in terms of parcel volume, according to data from Frost & Sullivan.