Alibaba profit up but revenue growth eases

Alibaba (BABA) reported lower-than-expected revenue in its December quarter earnings on Wednesday. Its core commerce revenues rose 40 percent 102.84 billion yuan ($14.95 billion).

Alibaba derives more than 90% of its sales from China and any signs of a worsening Chinese economy is very likely to impact the Chinese-dependent company.

The second most valuable public firm of Asia published revenue amounting to 117.28bn yuan (£13.4 billion) for the three months to the 31st of December, compared to 83 billion yuan that was recorded a year earlier.

Businesses worldwide are bearing the brunt of slowing growth in China growth, which has generated a third of global growth in recent years.

Net profit reached $4.9 billion in the October-December third quarter.

Alibaba shares is moving a bit wildly in pre-market as shares gained 2% initially on the back of the earnings headline before slipping back to flat levels.

"Our resilient operating and financial performance is a direct reflection of our persistent focus on better serving our growing base of almost 700 million consumers across retail, digital entertainment and local consumer services", said CEO Daniel Zhang in a press release.

In November last year, Alibaba's Single Day reported sales of Dollars 30.8 Billion in just 24 hours, increasing from USD 25.3 Billion compared to the year before.

Anticipating headwinds from economic uncertainty, Alibaba had lowered its revenue outlook for its financial year ending March even before the top sales season by 4 to 6 percent to the range of between 375 billion yuan and 383 billion yuan ($54.4 billion to $55.6 billion).

Alibaba finance chief Maggie Wu said the profitability from the company's core commerce business allowed it to generate the money to continue to invest.

China's economic growth in 2018 slowed to its weakest in almost three decades, amid faltering domestic demand and bruising U.S. tariffs.

"As Chinese consumers upgrade their lifestyles, they will purchase higher-quality products as well as more services and entertainment", CLSA said, adding that Alibaba was well-placed to profit from this.

  • Anthony Vega