Jack Ma-Backed Ant Sees Profit Slide 10% After Shake Up
Ant Group Co.’s profit dropped 10% in the March quarter, following a structural shakeup and ramped up efforts to grow overseas.
(Bloomberg) -- Ant Group Co.’s profit dropped 10% in the March quarter, following a structural shakeup and ramped up efforts to grow overseas.
The Hangzhou-based fintech company contributed 3.9 billion yuan ($545 million) of profit to Alibaba Group Holding Ltd. Based on Alibaba’s one-third stake in Ant, that translates to an estimated 11.7 billion yuan in profit for the three month ended in March, according to Bloomberg calculations based on the listed company’s disclosures.
The results compared with a 19% plunge in earnings for the previous three months, when Ant was hit by an investment loss. Its earnings lag a quarter behind Alibaba’s.
Ant declined to comment in an emailed statement.
The company made broad overhauls to its business in March, setting up independent boards for international, database and digital technologies units to pave the way for future spinoffs. The company has been expanding its overseas operations to offset slowing growth at home, tying up with at least 25 e-wallet platforms for cross-border payments in regions including Southeast Asia and Europe.
The moves come after billionaire Jack Ma gave up control of Ant last year. China wrapped up its crackdown on the once high-flying internet sector by slapping more than $1 billion in fines on Ant and Tencent Holdings Ltd. in July last year.
Ant’s international business has also been building its treasury management platform known as Whale, underpinned by blockchain technology. Separately it worked with DBS Group Holdings Ltd. to start a treasury token pilot project to improve the efficiency of fund movements between bank accounts.
Domestically, Ant is considering selling its stake in Baihang Credit Co., a personal credit reporting firm, as it awaits a license approval for another similar entity known as Qiantang, a person familiar said in June.
Ant proposed buying back as much as 7.6% of its shares last year, giving investors such as Fidelity Investments and T. Rowe Price Group Inc. an opportunity to sell some stock. Under the repurchase plan, the company’s valuation was trimmed to about $79 billion — well off its peak of $280 billion before regulators scrapped an initial public offering three years ago. The fintech company is awaiting a financial holding company license, which would help revive the IPO.
Initially catering to Chinese tourists traveling outside the country, the company has expanded its services into a backbone for cross-border payments known as Alipay+ that can be used by different wallets. The network connected more than 88 million merchants in 57 countries and regions as of early March.
Ant’s affiliate Alibaba saw revenue rise by only 4%, after aggressive promotions and new shopping features failed to drive spending in China.
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