China’s economy has been battered by the fallout from strict COVID-19 curbs including lockdowns and transport restrictions that have kept consumers home, pushed up unemployment, and tangled supply chains. Alibaba has also had to contend with a wide-ranging regulatory crackdown on alleged anti-competitive practices by China’s tech giants.
It warned it would not give forward-looking financial guidance due to Covid risks and uncertainty.
Alibaba has seen its market value plummet since Beijing launched its sweeping crackdown in 2020 on some of China’s largest home-grown companies.
The crackdown included a last-minute cancellation of a planned IPO by Alibaba’s financial arm Ant Group, which would have been the world’s largest public offering at the time. The company was also hit with a record $2.75 billion fine for alleged unfair practices last year. But Alibaba Group said that its revenue grew around 9% in the last quarter to 204.1 billion yuan, better than expected in a Bloomberg forecast. The company’s revenues -generated mainly by its core e-commerce operations – were up 19 % for the fiscal year ending March 31. Meanwhile, its full-year profit came to 62 billion yuan ($9.8 billion).
“Since mid-March 2022, our domestic businesses have been significantly affected by the Covid-19 resurgence in China, particularly in Shanghai,” the company said. “Considering the risks and uncertainties arising from Covid-19… we believe it is prudent at this time not to give financial guidance as we typically do at the start of the fiscal year,” it added.
Alibaba’s earnings follow a series of sluggish results by prominent Chinese tech firms, with internet giant Baidu reporting a net loss of 885 million yuan ($140 million) in the first quarter. Baidu’s business has been “negatively impacted” by China’s recent Covid-19 resurgence since mid-March, co-founder Robin Li said in a statement. Virus-related challenges continue to pressure Baidu’s near-term operations, Li said.
Tencent reported record low quarterly revenue growth at 135.5 billion yuan ($20.1 billion) in the first quarter, putting year-on-year expansion at nearly zero. China is the last major economy to stick to a strict zero-Covid policy, which is now being tested by the infectious Omicron variant.