Alibaba 2018 results boosted by Cainiao consolidation

2018 was another strong year of growth for Alibaba, based on its headline performance metrics released on Wednesday.

Revenues for the 12 months ended March 31 surged to RMB376.8bn ($56.1bn), up 51% against one year earlier. Excluding inorganic growth from M&A activity, its top line soared 39%.

Meanwhile, operating income came in at RMB57bn ($8.4bn), down 18%, primarily due to rise in share-based compensation expenses and a $250m settlement of a US federal class action lawsuit. Excluding these adjustments, income from operations would have increased by 8%.

However, adjusted EBITDA rose 15% to RMB121bn ($18.1bn), while adjusted EBITDA from core commerce was RMB136bn ($20.2bn), up 19% for the year, and marketplace-based core commerce adjusted EBITA, a non-GAAP measure of performance, rose 31% to RMB161.5bn ($24bn).

(Revenue from core commerce is primarily generated from China retail marketplaces, Freshippo,, AliExpress,,, Cainiao logistics services and local consumer services.)

Net cash from operating activities rose to almost RMB151bn from RMB125bn, while investing cash flow almost doubled to RMB151bn, meaning it did not generate any free cash flow on that basis, but given core capex requirements, its actual free cash flow came in at around RMB100bn, flattish on a comparable basis, while cash outflows from financing stood at about RMB7bn (cash inflows from financing were RMB20bn in 2017).

Cash and cash equivalents and short-term investments stood RMB193.2bn, bang in line with the prior year’s levels.

Chief executive officer Daniel Zhang said in the annual release that “Alibaba is becoming synonymous with everyday consumption in China, growing our base to 654m annual active consumers and extending our penetration in less-developed cities.”

He added that “our cloud and data technology and tremendous traction in New Retail have enabled us to continuously transform the way businesses operate in China and other emerging markets, which will contribute to our long-term growth”.

In international logistics, Cainiao Network and the logistics arm of Lazada, developed a growing network of assets and partners to support the expansion of its international commerce retail businesses (AliExpress and Lazada).

“In March 2019, our proprietary fulfillment and logistics solutions served over 75% of AliExpress packages and about 80% of Lazada packages were delivered out of its own sortation centers,” the group said, noting that Cainiao Network remains focused on developing cross-border fulfillment solutions for Tmall Global, utilising a combination of bonded warehouses in China and direct shipping from foreign countries. In March 2019, these cross-border fulfillment solutions served over 90% of all Tmall Global packages.

Lazada is expected to continue to invest in logistics infrastructure “in order to improve user experience” and “reduce delivery cost”, as factors such as “delivery speed and convenience” have become key competitive advantages in southeast Asia.

Revenue from Cainiao logistics services – including the domestic/international one-stop-shop logistics services and supply chain management solutions provided by Cainiao Network – stood at RMB14.8bn ($2.2bn), up 120% against RMB6.7bn the previous year, after inter-company transactions were eliminated.

The increase mainly reflected the full-year effect of consolidation of Cainiao in fiscal year 2019, a process which began in mid-October 2017.

Cash was deployed to shore up its valuation: it said in September it “announced an ADS repurchase plan to implement the previously announced $6bn share repurchase program. As of the end of March 2019, we had repurchased approximately 10.9m of our ADSs for a total of approximately $1.57bn”.

The annual results were in line with expectations, with its shares trading along with the broader stock market, as gauged by the S&P 500, on Wednesday.

Source: Transport Intelligence, May 16, 2019

Author: Alessandro Pasetti


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