Zhongtong Express (02057) announced its third-quarter performance for 2023: the parcel volume reached 7.5 billion pieces, and the adjusted net profit increased by 25.0% to 2.3 billion yuan. The sorting cost and transportation cost per ticket both decreased.

On November 17, 2023, ZTO Express (ZTO.US; 02057) announced its unaudited financial performance for the third quarter of 2023. The financial report shows that the company's parcel volume in the third quarter increased by 18.1% year-on-year to 7.5 billion pieces, and its market share expanded to 22.4%. While maintaining a high level of customer satisfaction, ZTO Express achieved profit growth, with adjusted net profit increasing by 25.0% year-on-year to RMB 2.3 billion. At the same time, the sorting and transportation costs per order achieved a double decrease. Lai Meisong, the founder, chairman and CEO of ZTO Express, said, "Despite the macroeconomic recovery falling below expectations, the express delivery industry still demonstrated rapid growth, with business volume in the industry increasing by 16.7% in the quarter. Facing intensified price competition, ZTO Express focused on improving service quality and persistently acquiring profitable business volume. We worked side by side with our network partners to maintain market share and provide support in important areas such as security, operational efficiency, and capacity deployment. Our digitalization and refined management initiatives continue to drive improvement in sorting and transportation cost efficiency. While maintaining a leading position in on-time delivery and customer satisfaction, ZTO Express increased its market share to 22.4% in the third quarter, with adjusted net profit growing by 25%." Lai Meisong added, "We have always adhered to the strategy of achieving balanced development in service quality, business scale, and profitability, and we have continuously proven our ability to do so. Our current focus is to establish long-term competitive advantages, including diversified products and services, first-class operational efficiency, maximum industry profit contribution, the most stable and profitable franchised network, and most importantly, the highest brand awareness and customer satisfaction. The achievement of these long-term goals will further drive industry differentiation, and ZTO Express will continue to maintain its leading competitive position." Yan Huiping, CFO of ZTO Express, said, "The core express delivery business's average revenue per order decreased by 13.5%, which is in line with the industry trend. However, compared to the industry, we have made greater efforts to optimize the proportion of direct customer business, which has had a greater impact on the decrease in average revenue per order. In addition, the subsidies provided to maintain market share and the decrease in parcel weight are also major reasons for the decrease in unit price. Due to standardized and digital management initiatives, our sorting and transportation costs per order decreased by 11%, surpassing expectations. Sales and administrative expenses as a percentage of revenue remained stable at around 5%. Operating cash flow was RMB 2.9 billion, and capital expenditure was RMB 1.3 billion." Yan Huiping added, "Our performance in the third quarter once again proves that ZTO Express has the ability to achieve a balance in quality, scale, and profitability. We are not influenced by short-term external events or pressure to pursue internal performance, and we always focus on steadily improving service quality, maintaining a minimum profit line, insisting on acquiring profitable business volume, and achieving a 25% growth in adjusted net profit. Due to the erosion of the industry's overall profitability caused by irrational competition based on price, our originally targeted market share growth of 1.5 percentage points for the year is no longer reasonable. We still maintain our guidance of business volume reaching 29.27 billion to 30.24 billion pieces for the whole year, with a year-on-year growth rate of 20% to 24%." From an operational perspective, as of September 30, 2023, ZTO Express had 97 sorting centers, over 31,000 pickup and delivery points, approximately 6,000 direct network partners, about 3,800 intercity transportation routes between sorting centers, and over 10,000 self-owned long-haul vehicles, of which more than 9,300 were high-capacity models with a length of 15 to 17 meters. With the increase in quantity and quality, the consumer market's potential is unleashed Express delivery logistics connects cities and industries, facilitating the stability and recovery of the economy. In the third quarter, ZTO Express's multi-site transfer centers, including in Shandong Linyi, Hebei Zhengding, Shaanxi Yan'an, and Guizhou Zunyi, were successively put into operation. These centers, with high capacity and efficiency, improved service and timeliness, leading to steady increases in customer satisfaction and demonstrating the synergistic effects of capacity construction between centers and stations. During the 2023 "Double 11" peak season, ZTO Express once again became a logistics partner invited by major domestic e-commerce platforms, providing solid logistics and operational support for businesses and improving the shopping experience for consumers. Data shows that during this year's "Double 11" peak season, ZTO Express's network orders continuously exceeded 100 million, with a daily peak business volume exceeding 140 million. The comprehensive capabilities of its end-to-end pickup, transfer, and delivery services continue to show strength, releasing resilience and vitality in the consumer market. Ecological synergy promotes cost reduction and efficiency improvement in industries Leveraging the advantages of its core express delivery business, ZTO Express is enhancing its comprehensive logistics service capabilities. In the third quarter, ZTO Express, ZTO Freight, ZTO Smart and Maotai Logistics signed a comprehensive strategic cooperation agreement, focusing on building a logistics system for the liquor industry and jointly creating a last-mile delivery system, among other areas. ZTO Freight's volume during the "Double 11" period exceeded 457,000 tons, a year-on-year increase of 16.97%. ZTO Cloud Warehouse Service has been upgraded again, with flexible expansion of storage capacity and advanced pre-packaging processes, enabling delivery commitments to be fulfilled within just 9 minutes and 19 seconds for the first order of the "Double 11" period. ZTO Cold Chain launched the "Seafood" project for Xinjiang, providing integrated cold chain transportation solutions for Xinjiang seafood. ZTO International has assisted Anhui Jianghuai Automobile Group's "going abroad" efforts to reduce costs and improve efficiency, helping speed up same-city delivery in Phnom Penh, Cambodia to within 3 hours... Warm-hearted peak season, caring for delivery drivers never stops In the third quarter, ZTO Express implemented various measures to demonstrate its care and support for delivery drivers. During the quarter, ZTO Express led the "Enjoy a Cool Summer" campaign, providing cooling measures in 30 cities across China, including Beijing, Shanghai, Hangzhou, Nanjing, and Chongqing. During the college entrance examination period, the Group once again rewarded employees whose children took part in the 2023 examination and were admitted to key higher education institutions, demonstrating the value of "building and sharing together" at ZTO Express. As November arrived with a cold wave sweeping across the country, ZTO Express organized various forms of warm activities, such as delivering warmth, employee forums, and psychological support activities, to make every employee feel the warmth of the ZTO family. Note: Some of the translations are approximate due to the complexity of Chinese business terms and the unavailability of exact English equivalents.