JD.Com Turns First Profit in 13 Years as Chinese Consumers Seek Out Higher-Quality Goods
Yicai Global
/SOURCE : Yicai
JD.Com Turns First Profit in 13 Years as Chinese Consumers Seek Out Higher-Quality Goods

(Yicai Global) March 3 -- JD.Com Inc. [NASDAQ:JD], China's second-biggest online retailer, made its first annual profit since opening 13 years ago after revenue rose and margins widened thanks in part to shifting consumption patterns and a focus on technology and Big Data to improve business performance.

Non-GAAP net operating profit was CNY1 billion (USD140 million) in the year through Dec. 31, translating into CNY0.75 (USD0.11) per American Depository Share, compared with a CNY0.62 loss per share in 2015, the Beijing-based company said in an earnings report released yesterday. Revenue jumped 47 percent to CNY80.3 billion.

JD.Com benefited from higher sales and a continuous seven-month uptick in margins at its JD Mall as younger Chinese consumers increasingly look to buy higher-end goods and the company invests in a smart supply chain system to help upgrade the retail experience and boost operating efficiency. Its full-year margin tripled to 0.9 percent from 2015 figures.

An Yicai Global survey in January showed that 79 percent of Chinese people born in the 2000s and 80 percent of those born in the 1990s spent more than a fifth of their monthly income on a daily necessity at least once in the past year.

The number of active users on the site jumped to 226.6 million, up 46 percent from 155 million a year earlier.

Under Generally Accepted Accounting Principles, the firm made a full-year loss of CNY2.1 billion, a considerable improvement over CNY6.5 billion in 2015. Losses on American Depository Shares fell to CNY2.76 a share from CNY6.86. Net income for the year was CNY260.2 billion (USD37.5 billion), up 44 percent and cash reserves increased 121 percent to CNY15.6 billion.

In the fourth quarter, net income reached CNY80.3 billion, up 47 percent from the same period in 2015. Cash reserves for the quarter were CNY31.3 billion. The non-GAAP margin for the fourth quarter was 0.8 percent, up from 0.04 from the last quarter of the previous year. And non-GAAP operating profit was CNY490 million, compared with a CNY840 million loss during the same period a year earlier.

Profit on ADSs was CNY0.4, up from a loss of CNY0.48 during the fourth quarter of 2015. Under GAAP, the firm lost CNY442 million in the fourth quarter, compared to CNY4.2 billion a year earlier. Net loss per ADS was CNY1.26, down from CNY5.57 in the same period in 2015.

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