By CHENG Lu
Alibaba more than doubled its profit in Q4 from a year before to 46.8 billion yuan (US$6.7 billion). Revenue was almost flat year-on-year at 248 billion yuan.
Revenue from China commerce, consisting mainly of domestic retail businesses such as Taobao, Tmall and Freshippo (Hema) was flat year-on-year at 170 billion yuan. GMV on Taobao and Tmall declined mid-single-digit. Alibaba attributed it to weak demand, competition, and supply chain disruptions due to Covid restrictions last year.
Apparel and other non-essential goods were weak, while healthcare and wellness grew fast, consistent with Bureau of Statistics data. Chinese New Year holiday travel also affected online sales, said CEO Daniel Zhang in the earnings call. Apparel and outdoors have been quickly recovering.
“All of our merchants have expressed their strong desire to get back to business. We expect this recovery will continue,” Zhang said.
Third-party sales (91.3 billion yuan)– called “customer management” in the financial report – fell by 9 percent, larger than the 7-percent decrease last quarter. Direct sales (74.4 billion yuan), on the other hand, were up by 10 percent mainly driven by Freshippo and Alibaba Health.
Freshippo, Taocaicai (grocery group buying), and Taote (deals), all relatively new businesses, are still losing money but the losses were narrowing.
Zhang said Taobao and Tianmao will make improvements in three ways
- Increase time spent on apps through video content
- Offer better prices, especially for groceries
- Neighborhood digital retail businesses.
Revenue from international retail (AliExpress, Daraz, Lazada and Trendyol) increased by 18 percent and logistics operation Cainiao grew by 27 percent. Cloud was almost flat. Local consumer services increased by 6 percent.
Alibaba managed to cut operating costs by 60 percent and total costs by 11 percent in Q4, saving 22.8 billion yuan in a single quarter. Marketing expenses were cut by 6.1 billion yuan but still amounted to 30.6 billion, or 12 percent of total revenue. General and administrative expenses were 10.3 billion, slightly up by 1.9 billion mainly due to severance pay.
The cost-cutting greatly boosted profit, which went up by 138 percent to 46.8 billion yuan. Cash from operating activities was 87.4 billion yuan, up by 9 percent from the same period last year.
An analyst asked during the earnings call whether there is a “next big area or areas where Alibaba can achieve significant growth. Zhang replied that Alibaba will not seek out new opportunities elsewhere because in these markets “the ceiling is high enough, and the market is big enough.”
