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Net profit for the period tumbled 96.8 per cent to 365 million yuan, compared to 11.4 billion yuan a year ago.
“Due to the irrational competition which started this quarter”, Meituan said the operating profit of its local commerce segment fell 75.6 per cent year on year to 3.7 billion yuan, while operating margin decreased by 19.4 percentage points to 5.7 per cent, according to the company’s filing on Wednesday. Total operating profit dropped 98 per cent to 226.4 million yuan.
The sharp profit decline was attributed to a 27 per cent increase in cost of revenue, mainly due to higher courier incentives; a 51.8 per cent jump in selling and marketing expenses; and a 17.2 per cent rise in research and development spending, the filing said.
Meituan’s Hong Kong-listed shares were down 3 per cent to close at HK$116.3 on Wednesday before its financial results were published.
