JD.com posts profitable Q4 but expects slow recovery in China

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JD.com has swung to a profitable Q4 2022, registering US$441 million in net income versus a net loss of US$712 million in the same year-ago period.

Adjusted EBITDA, a non-GAAP measure, more than doubled year on year to US$1.3 billion. The Chinese ecommerce major also logged a modest 7.1% increase in net revenue to US$42.8 billion in the quarter.

However, in the company’s earnings call, JD Retail CEO Lei Xu said he expects a recovery in China to come slowly.

This falls in line with China’s relatively low growth target of only 5% for 2023.

Revenue from JD.com’s retail business was at US$37.5 billion for the quarter, a 4% increase from the prior year. The segment contributed 87.6% to the company’s total revenue in the quarter.

The results come after a stressful 2022 for JD.com. Last year, JD.com boss Richard Liu reportedly berated top management over the company’s slow growth, and said that keeping prices low was “the most important weapons responsible for our past success.”

The ecommerce major also recently closed down its operations in Indonesia and Thailand. Such markets “require heavy investment over a prolonged period to build an efficient and scalable B2C e-commerce business,” CFO Sandy Xu explained in the recent earnings call.

To strike back rivals, JD.com recently launched a US$1.4 billion discount campaign for products from the likes of Apple and Dyson.

With this announcement, fears of a costly price war with fellow ecommerce leader Pinduodo rattled investors, sending JD.com’s stock price down. It ended yesterday with a 11% drop to US$41.68.

For full calendar year 2022, JD.com’s net revenues hit US$151.7 billion, up 9.9% compared to 2021. Its net income was at US$1.5 billion, recovering from a net loss of US$516.7 million.

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