SF Holding, one of China’s top delivery firms, said it expects to book a loss for the first quarter this year, as the rapid expansion of new businesses pushed costs skyward, reported Caixin.
The courier expects to report a net loss of about RMB 900 million ($137.4 million) to RMB 1.1 billion in the first quarter, compared to a net profit of RMB 907 million in the same period in 2020, according to a Thursday filing to the Shenzhen Stock Exchange. Its 2020 annual report showed SF Holding recorded RMB 7.3 billion in net profit, up 26.4% year-on-year.
The loss, SF Holding said, was primarily due to expanding new businesses and the large amount of resources this required over the last few quarters. In May 2019, the company set up a new division catering specifically to e-commerce deliveries, which typically brings in lower shipping fees than its other services.
“The fast growing e-commerce delivery services did bring in a lot of revenue, but the new business also had an impact on the existing shipping network to some degree and squeezed its resources,” a source at SF Holding told Caixin, adding that the company needed to establish a new shipping network dedicated to e-commerce deliveries. “That involved adjusting shipping routes and reallocating vehicle resources,” the source said.