SF Express suffers loss in Q1 2021

Last week Chinese Logistics Giant SF Express Holding announced that it suffered heavy financial losses in the first quarter of 2021, reports Asian Polyglot View Blog. The financial report shows that its operating income reached 42.62 billion yuan, a year-on-year increase of 27.07%, while its net profit loss was 989 million yuan, down 209.01% year-on-year.

On April 9, SF Express predicted that the loss in the first quarter of 2021 would be 900 million to 1.1 billion yuan, which led to an apology from Wang Wei, the chairman and general manager of the company, at the annual shareholders’ meeting. “First of all, I need to make an apology to all the shareholders, because I think I have underachieved in my job for the past quarter,” he said.

However, the 2020 financial report released by the company one month ago showed that it recorded more than 150 billion yuan in revenue and more than 7 billion yuan in net profit last year.

In the financial report, SF Express attributed the loss to five reasons. In order to expand new business, the company increased the investment in fast express, intra-city urgent delivery and warehouse network construction.

In response to the rapid growth of express delivery starting in the fourth quarter of last year, the company began to invest more in transfer station automation, express processing scale, sites and equipment, resulting in an increase in amortization and depreciation costs this year. At the same time, temporary resources the company invested to cope with the business peak before the Spring Festival led to an increase in costs.

SF Express exhausted overlapping resources in the initial stage of network convergence, which led to the soaring costs.

During last year’s Spring Festival holiday, the Chinese government encouraged people to stay put rather than travel across the country to meet family and friends. To meet the heightened demands of e-commerce platforms and customers during the festival, SF Express increased the number of on-the-job personnel such as dispatchers, warehouse keepers and transit operators, and also provided subsidies for them, resulting in massive bills.

Later, the growth rate in online orders that need to be finished in a specific time slowed down, while the order of economical express products grew rapidly.

In addition, SF Express announced that Wu Weiting resigned as the firm’s chief financial officer, deputy general manager and member of the board’s audit committee, citing personal reasons.