Alibaba posts 58pc gain in quarterly profit, warns coronavirus crisis will impact revenue growth

E-commerce giant Alibaba Group Holding expects new challenges ahead, as it warned of the potential negative impact of the coronavirus outbreak to the global economy.

Daniel Zhang Yong, Alibaba’s executive chairman and chief executive, described those prospects after the company reported a 58 per cent increase in profit for the quarter ended December 31, boosted by the e-commerce giant’s record sales during Singles’ Day – the world’s largest shopping festival – in November.

“The [coronavirus] outbreak is having significant impact on China’s economy, and may potentially affect the global economy,” said Zhang in an earnings call with analysts on Thursday. “It will present near-term challenges to the development of Alibaba’s business across the board.”

While the company cannot accurately estimate the full financial impact of the health crisis to its business at present, there is currently weakness in its China retail platforms and local consumer services.

“What we’ve seen, particularly in the past 12 to 13 days since the start of February, is that our overall revenue growth rate will be negatively impacted in the March quarter,” said Maggie Wu Wei, Alibaba’s chief financial officer.

On Thursday, Alibaba reported revenue of 161.5 billion yuan (US$23.2 billion) in its fiscal third quarter, up 38 per cent from 117.3 billion yuan a year ago. That improvement was made on the back of steady growth at its core commerce and cloud computing businesses, despite a slowdown in the domestic economy and China’s protracted trade war with the United States.