Multinational conglomerate Alibaba Group Holding on Thursday reported a net loss of 2.88 billion dollars (20.6 billion yuan) in the third quarter as the slowing Chinese economy and reduced spending by customers impacted the financials of the company.
In a survey conducted by Bloomberg News, it was stated that analysts were expecting a profit of 18.8 billion yuan. A large portion of the net loss is due to the poor performance of equity investments made by Alibaba Group Holding.
Even though the company posted a net loss, it was able to get revenue streams back on track. Alibaba’s revenue from the domestic economy of China stood at 135.4 billion yuan in the third quarter of the current financial year. This is only 1 percent lesser than the previous year’s revenue during the third quarter. Sales in the international market grew by nearly 4 percent in the third quarter to post 15.7 billion yuan.
Chief Executive Officer and chairman of Alibaba Group Holding, Daniel Zhang Yong said that the conglomerate was able to perform strongly during the third quarter even as uncertain macroeconomic conditions continued to keep the markets volatile. “The ongoing resurgence of Covid-19, geopolitical tension, inflation, and currency depreciation – the convergence of all these forces have created considerable difficulties for business operations,” Daniel said.
There are news reports that Alibaba Group Holding laid off more than 1000 employees on Thursday to cut costs.
According to the company, Alibaba suffered losses in the third quarter mainly due to the net decrease in fair values of investments held by Ant Group. The slump in the operating profits of Ant Group has also impacted the finances of Alibaba Group Holding.
Ant Group which is a tech affiliate company of Alibaba is one of the largest tech and online payment service providers in the country. Ant Group had earlier reported a 63.2 percent decrease in profit for the June quarter from last year to 7.3 billion yuan. The total financial contribution of Ant Group towards the financial statement of Alibaba Group Holding fell from 6.5 billion yuan to 2.4 billion yuan.
Both Alibaba and Ant Group have been suffering from losses for the past few quarters as the Chinese government continues to strictly follow its “zero covid policy”. Snap lockdowns in major cities in name of lockdowns and such disruptions to economic activities had severely slowed down economic growth.
China which has the second largest economy in the world only grew at a meager rate of 3 percent in the first nine months of the current calendar year. This is much lesser than the target of 5.5 percent.