管理層發言
Good day and welcome to the ZTO Express Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. Please also note, today's event is being recorded. I would now like to turn the conference over to Sophie Li, Head of Capital Markets. Please go ahead.
Thank you, Rocco. Hello, everyone, and thank you for joining us today. The company's results and the Investor Relations presentation were released earlier today and are available on the company's IR website at ir.zto.com. On the call today from ZTO are Mr. Meisong Lai, Chairman and Chief Executive Officer, and Ms. Huiping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Ms. Yan, who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows. I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations in our current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under law. It is now my pleasure to introduce Mr. Meisong Lai. Mr. Lai will read through his prepared remarks in their entirety in Chinese before I translate for him in English.
Hello, everyone. Thank you for joining today's conference call. In the fourth quarter of 2025, the express delivery industry's overall parcel volume grew moderately by 5% year-over-year. ZTO maintained its industry-leading service quality during the quarter, with parcel volume reaching 10.56 billion, an increase of 9.2% over last year, and our market share expanded by 0.8 percentage points. At the same time, we achieved an adjusted net income of RMB 2.69 billion. ZTO continued to lead the industry in both scale and profitability. For the full year of 2025, China's express delivery industry achieved a steady growth of 13.6% with volume reaching the 200 billion parcel milestone. In the third quarter, relevant government agencies formally advocated against involution and promoted the protection of grassroots interest, steering the industry towards healthy and sustainable development. As a result, overall pricing stabilized and recovered, and the industry accelerated its transition toward a new stage of development focused on both quantity and quality. In 2025, ZTO achieved an annual parcel volume of 38.5 billion, maintaining a steady market share year-over-year. During this critical phase of industry transformation, ZTO stayed committed to our high-quality development strategy, continuously enhanced differentiated product offering and service capability. Facing intense competition, ZTO actively responded to the government's call and took the lead in maintaining a healthy industry order. Leveraging our robust infrastructure, data-driven operations and management capabilities, we successfully safeguarded our competitive advantages in quality, scale and profitability. Our annual retail parcel volume grew by 46% year-over-year, significantly outpacing the overall growth of e-commerce parcels. In the fourth quarter, daily retail volume reached close to 10 million parcels. This product mix optimization has enhanced brand recognition and affinity while providing strong support for core revenue growth and alleviating the impact from volume-based subsidies. At the same time, we continue to strengthen standardized operations in coordination across our transit segments, improving both operational efficiency and service timeliness. Our combined unit cost for transportation and sorting decreased by RMB 0.06 for the full year. And with a stable SG&A structure, our annual adjusted net income reached RMB 9.5 billion. Entering 2026, the express delivery industry is further reaching a consensus on high-quality development, supported by stable macroeconomic foundations and the ongoing efforts against involution. Naturally, market uncertainties remain, and the transition towards quality growth requires deeper cultivation. ZTO will shoulder its responsibility by adhering to strategies for healthy and sustainable development. We will focus on transit and last mile capability building, continue to optimize the fairness and transparency of network policies and protect trust and confidence. Our priorities for the next stage are as follows: first, uphold service quality to reinforce brand advantages, staying results-oriented while focusing on execution. We will integrate public and platform service indicators into performance evaluation with accountabilities assigned to specific positions, individuals and behaviors. By targeting specific weak links and continuously optimizing our product mix, we will enhance our service capability and differentiation to expand our brand influence. Second, keep efforts for cost reduction and operational efficiency to solidify cost leadership. Centered around better integration from end to end, we will accelerate the implementation of direct linkage model, establish standardized, visualized and comparable benchmarks, prescribe cost reduction targets to every last-mile segment and leverage fluctuation monitoring to unlock potential. We will achieve optimal cost efficiency across transit and delivery. Third, optimize network policies and incentive mechanisms, focus on steady volume growth and improved cost efficiency. We will rely on detailed analysis for regions lacking market share to enhance the efficiency of cost sharing mechanisms and ensure more precise deployment of resources. Fourth, safeguard fairness to ensure network stability, secure rights and obligations of our partners while balancing profit distribution, strictly implementing better pay for better results and survival of the fittest while ensuring reasonable income for outlets and couriers. We will empower high-quality outlets and provide support in governing underperformers to protect a win-win ecosystem. China's express delivery industry remains positive, and the competition will steadily become more rational as the leading enterprises continue to turn to intrinsic value. The industry landscape will further bifurcate and the concentration will increase. ZTO remains committed to its long-term strategy of integrating service quality, market share and a reasonable profit. As the industry shifts from scale expansion to include value proposition, we must lead the way in prioritizing both quantity and quality. Only by expanding diversified and differentiated products, reinforcing our infrastructure foundation, harnessing the productivity of digital operations, unlocking the potential of end-to-end cost reduction and prioritizing the long-term trust and stability of our franchisee network can we seize opportunities and navigate through cycles. For over 20 years, being our best has been the constant for ZTO amidst all changes. Building on our shared success philosophy, we will take pragmatic actions to fulfill our mission of bringing happiness to more people. We will continue to lead in this new journey of high-quality development, creating sustainable and long-term value for the ZTO community.
Thank you, Chairman, and thank you, Sophie. Hello to everyone on the call. As I go through our financials, please note that unless specifically mentioned, all numbers quoted are in RMB and percentage changes refer to year-over-year comparison. Again, detailed financial information and performances, unit economics and cash flow are already posted on our website, and I'll only go through some of the highlights here. In the fourth quarter, benefiting from the government's call against involution, we prioritized service quality and core competency to drive sustainable growth. Our parcel volume grew 9.2% to 10.56 billion in Q4, and 13.3% to 38.5 billion for the full year. Total revenue increased 12.3% to RMB 14.5 billion in Q4 and increased 10.9% to RMB 49.1 billion for the year. Income from operations was RMB 3.2 billion and RMB 10.5 billion, or decreased 7.6% and 11% for the fourth quarter and the year, respectively. As our corporate spending remained stable and efficient, we achieved adjusted net income of RMB 2.7 billion and RMB 9.5 billion for the fourth quarter and full year, respectively. ASP for our core express delivery business increased by 2.9% or RMB 0.03 in Q4. This was primarily driven by a RMB 0.15 positive contribution from an improved mix in KA volume specifically our higher-value reverse logistics services, offsetting RMB 0.11 in higher volume incentives. For the full year, ASP decreased slightly by 1.7% or RMB 0.03. This reflects a RMB 0.16 gain from higher retail volume, offset by a RMB 0.15 impact from volume incentives and a RMB 0.03 decrease due to lower average weight per parcel. Total cost of revenue was RMB 10.8 billion for Q4 and RMB 36.8 billion for the year, which increased 18.2% for Q4 and 20.5% for the full year. From a unit perspective, while the core express delivery unit cost rose RMB 0.08 to RMB 1.00 in Q4, and RMB 0.07 to RMB 0.94 for the year, KA cost was the main driver of the increase, which was partially offset by transit cost productivity. The combined unit cost for sorting and transportation decreased by 4.5% or RMB 0.04 in Q4 and 8.8% or RMB 0.06 for the year, driven by economies of scale and our ongoing productivity initiatives. Specifically, unit cost of line haul transportation decreased 7.5% to RMB 0.37 in Q4, and 12.2% to RMB 0.36 for the year, reflecting optimized route planning and enhanced load efficiencies. Unit sorting costs remained steady at RMB 0.26 in Q4 and decreased 3.7% to RMB 0.26 for the full year. Automation continues to drive labor efficiency while partially offset by the ramp-up and upgrade costs of new and existing facilities. Unit KA costs increased by RMB 0.13, which is consistent with the strategic expansion of our KA volume. Gross profit declined 2.1% to RMB 3.7 billion for Q4 and 10.5% to RMB 12.3 billion for 2025. Gross profit margin rate decreased 3.7 points to 25.4% for the quarter and 6 points to 25% for the year. SG&A, excluding SBC, decreased 1.3% to RMB 641 million for Q4, and increased 1.6% to RMB 2.4 billion for the year. SG&A expenses, excluding SBC as a percentage of revenue declined to 4.4% for the quarter and 4.9% for the year, reflecting strong corporate cost efficiency. Income from operations decreased 7.6% to RMB 3.2 billion for Q4 and decreased 11.1% to RMB 10.5 billion for the year. Adjusted margin dropped 4.7 points to 22% for the quarter and 5.3 points to 21.3% for the year. Operating cash flow surged 50.6% to RMB 4.2 billion in Q4 and reached RMB 12 billion for the year, excluding the RMB 850 million one-time franchise deposit refunds under the new business policy in Q4 last year. Our cash flow from operations remains robust. Capital expenditures for the year totaled RMB 6.1 billion. Now moving on to our business outlook. Based on current market conditions, we anticipate our parcel volume for 2026 to grow in the range of 10% to 13% year-over-year. This growth rate implies an annual parcel volume between 42.37 billion and 43.52 billion. We are committed to growing our volume faster than the industry average for the year. Now on to our shareholder returns. The Board has approved a semi-annual cash dividend of USD 0.39 per ADS in accordance with the established 40% payout ratio. In addition, having substantially completed our previous USD 2 billion program, the Board has authorized a new 24-month $1.5 billion share buyback program effective through March 2028. Finally, we are pleased to announce an enhanced shareholder return program, starting from 2026, that targets an aggregate annual return ratio of no less than 50% of our adjusted net income for the previous fiscal year, comprising both cash dividends and share buyback. This enhancement reflects our commitment to optimize capital allocation and deliver consistent long-term value to our shareholders. This concludes our prepared remarks. Operator, please open the line for questions.
分析師問答
And today's first question comes from Qianlei Fan with Morgan Stanley.
Let me translate for myself. I have two questions. The first question is about anti-involution. After the Chinese New Year, we have seen lots of news, the anti-involution dynamics everywhere in China. So is there any new updates on the anti-involution initiatives? How do you expect the sustainability of such anti-involution driven price hikes? What's your take on the attitude from the regulator towards anti-involution? And what's your expectation on the potential pricing trends for the rest of the year? The second question is about industry growth outlook and competition landscape. So taking into consideration potential price hikes and anti-involution, what's your expectation on the full-year industry growth outlook? And with this outlook, what's your expectation on the industry competition landscape and market share dynamics?
Thank you very much for your question. Since the introduction of the anti-involution policy in the third quarter last year, the industry's competitive landscape has steadily improved. Parcel prices have recovered and the focus has turned towards safeguarding the interests of frontline people such as outlets and couriers. Following the spring festival, the policy has remained in effect. With its continued enforcement, the industry is well positioned to sustain competition above the cost line. As one of the key players in the industry, we are not only participants but must also take on a leadership role. ZTO's strategy is well aligned with the government's effort to combat involution, seeking balanced development that prioritizes service quality, effectively protects the rights and interests of outlets and couriers, and promotes a healthy, orderly competitive environment for the industry. Regarding sector growth, the scale or parcel volume of China's express delivery industry approached 200 billion in 2025, which established a significantly large base. With the implementation of the anti-involution policy, express delivery prices have steadily recovered and low-priced parcel volumes have gradually decreased. It is reasonable to expect a gradual deceleration of industry growth and a transition from a volume-driven model to a new phase focused on high-quality development. Note that the Postal Bureau has estimated an 8% growth for 2026 and ZTO has given guidance of growth between 10% to 13%, which implies development faster than the industry average. On the competitive landscape, as macroeconomic conditions continue to improve and the express delivery industry moves towards higher-quality development, market demand will naturally gravitate toward and become increasingly concentrated among companies that prioritize service and operational efficiencies. Leading enterprises, leveraging superior service capabilities and well-established infrastructure networks, are better positioned to further consolidate the market, driven by policy guidance and reinforced by industry self-regulation. The trend of bifurcation is expected to continue, fostering a healthier and more orderly competitive landscape.
And our next question today comes from Stephen Xu with Goldman Sachs.
I have two questions. My first question is under the anti-involution scheme, what is 2026 priority for your company? Is it market share, profit or network governance? Also, does the RMB 200 million fund that you dedicated to support your frontline employees as well as your network signal more support for your partners? My second question is: given that January to February GMV growth industry-wide has been faster than volume growth for the first time since 2023, is this mix driven or structural? Could the competition shift to quality or is it only an improvement?
ZTO remains steadfast in our fundamental approach of integrating service quality, market share and a reasonable level of profit, which serves as our core strategy to navigate cycles and seize long-term opportunities. Entering 2026, supported by stable macroeconomic fundamentals, the industry-wide consensus against involution continues to solidify. ZTO will respond to the national call by taking the lead in maintaining a steady and rational industry competitive order, driving an accelerated transition of our operational focus from scale expansion towards a value proposition centered on both quality and quantity. We clearly recognize that the restoration and stability of our franchise network ecosystem in terms of trust and hope are the cornerstones of high-quality development across the entire network, with strategic significance that outweighs short-term financial gain. Therefore, our current strategic focus is on continuously optimizing the fairness and transparency of our network policies to effectively safeguard reasonable income levels for our grassroots partners and frontline couriers. The recent launch of a RMB 200 million special service incentive fund is indeed intended specifically because we are putting quality as the priority. This is a concrete demonstration of our shared success philosophy and our pragmatic actions to provide targeted support to high-quality outlets while empowering frontline employees. This initiative aims to stimulate the network's intrinsic motivation by optimizing profit-sharing mechanisms, reinforcing our brand advantage and building a win-win ecosystem for the entire network. The RMB 200 million is going to be allocated and distributed across the whole end-to-end operations from pickup to delivery. The goal is to expand recognition of shared success and effectively allocate interests among all stakeholders, including the small micro-operators in our business, which are the key foundation of our long-term success. Regarding your second question, the turnaround in average order value in early 2026 confirms that the industry is undergoing a transformation from lower-price volume chasing to value restoration. This shift is fundamentally driven by stabilization of macro fundamentals and the deepening consensus against involution, which has accelerated the exit of loss-making low-price volume. We firmly believe that irrational price competition creates no incremental value for either e-commerce platforms or express delivery operators. Current market dynamics represent a structural upgrade in competition, moving from price-driven to quality-driven. This evolution provides a solid foundation for sustainable price improvements across the whole industry. ZTO remains committed to our tripart strategy and our focus on high-quality customer services has yielded clear results. In 2025, our retail parcel volume surged 46% year-over-year with daily volume approaching 10 million in Q4. Looking ahead, we will continue to leverage our leading cost advantage and superior services to lead the industry through this quantity-to-quality cycle and increase long-term value.
And our next question comes from Aaron Luo with UBS.
I have two questions. One is about our recent issuance of convertible bonds in early February. I'd like to understand more of our major considerations behind the recent issuance and, more importantly, at what pace should we expect the share buybacks to proceed? The second question is about AI, which has continued to be a very hot topic among investors. I'm curious about the major applications of AI and large models at our company.
Can I just go straight to English? The convertible bond in February 2026: the company issued $1.5 billion 5-year convertible bonds. We launched it during a window where we could take advantage of low-cost financing during a period where the company's market value was under-assessed. The proceeds, with a net amount of about USD 1.4 billion, are intended solely for the company's share buyback. This issuance is intended to effectively enhance earnings per share and improve shareholder value and optimize our company's capital structure. The pace of buyback is that the repurchase program is progressing very efficiently. We completed approximately $600 million in total share buyback on the issuance day as well as during the subsequent trading window. For the remaining $800 million, we plan to complete the repurchase over the next year, taking market price fluctuations into consideration. At a reasonable price range, we will continue programs to consistently do the buybacks to strengthen our shareholder returns. On the new shareholder return plan, we established a consistent and integrated shareholder return system that combines dividend and buyback mechanisms, targeting no less than 50% of adjusted net profit from the prior year. Now on your question on AI.
ZTO has steadily advanced its digital transformation in recent years and is driving deeper integration of AI technology across the entire express delivery chain to shift from experience-driven to data-driven operations. First, our focus on AI empowerment across the chain is on reducing cost and increasing efficiency. At the sorting end, we are promoting the application of 3D digital twins and computer vision technologies, which have now been implemented in 25 of our super sorting centers. This system enables remote monitoring and automatic anomaly alerts, helping sorting centers and outlets reduce missorting rates by about 60%. While improving operational precision, it has also significantly lowered labor cost. On the customer service side, the intelligent service center is leveraging an AI-powered customer service system that can automatically handle over 70% of end-to-end work orders and enables merchants to directly connect with last-mile couriers in-progress or for after-sales support. Meanwhile, intelligent assistants such as Ask Xiaotong and Tracking Assistant cover over 80% of routine business inquiries at the outlet level, significantly reducing customer service costs at both outlet level and headquarters. On the last mile dispatch side, dispatching becomes more precise with AI implementation. Leveraging our in-house high-precision mapping data, we apply AI to outlet site selection and time-dynamic delivery route planning. This has empowered large-scale outlets to reduce short-haul transportation cost by over 20%, and enabled precise order allocation and intelligent dispatch for tens of millions of orders per day during peak retail parcel collection periods. Regarding large models, we are driving the evolution from execution tools to business partner or AI agent scenarios. In the past, AI primarily replaced repetitive labor, but large models are now transforming our business operation structures and cycles. We are focusing on two key areas: one, deep business analysis at both headquarters and regional levels, leveraging AI-driven inquiries for data mining. This tool not only generates reports as needed but also uncovers hidden patterns within complex customer quality and cost data that management may have previously overlooked, allowing us to embed technology into the heart of our lean management system for problem identification and problem solving. Two, high-precision business forecasting. We are introducing a general-purpose time-sensitive forecasting model to upgrade our existing forecast system. This model can learn from vast patterns across industries based on our historical and ongoing data and quickly adapt to new scenarios, enabling more granular and timely parcel volume forecasts and providing robust data support for operations including capacity planning and route planning. We aim to maximize intelligence to drive operational efficiencies.
Thank you. That concludes our question-and-answer session. I'd like to turn the conference back over to the company for closing remarks.
Thank you, everyone, again for joining us. As the Chairman pointed out, the industry is entering into a stable growth stage and we are committed to grow our volume faster than the industry average. Our tripart strategy and corporate directives are intact, and we are focused on building our infrastructure capability, enhancing our ability with technology and helping ensure fairness of our network policy to further enhance trust and fairness across our network so that we have a sustainable long-term business, creating value for our stakeholders, including shareholders. This concludes our meeting today. Thank you again. We look forward to talking with you offline.
Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. Portions of this transcript that were spoken by an interpreter present on the live call have been translated and presented in English by the interpreter.