#ZKH Group #MRO Procurement #China #Shanghai #日本

ZKH Group Limited Reports Q3 2024 Financial Results

ZKH Group Limited, a prominent player in the maintenance, repair, and operations (MRO) procurement industry in China, shared its unaudited financial results for the third quarter ending September 30, 2024. The company noted a slight dip in gross merchandise volume (GMV) but highlighted a year-over-year increase in the number of customers, underscoring the resilience of its business model amidst ongoing market fluctuations.

Q3 2024 Key Highlights

• - GMV Decline: Total GMV reported was approximately RMB 2.69 billion, a decrease of 7.2% compared to the same quarter in the previous year. The ZKH platform experienced a 7.5% decline, while the GBB platform saw a 4.1% reduction in GMV.
• - Customer Growth: The company successfully expanded its customer base by 16.9%, reaching nearly 48,000 customers in total. The ZKH platform saw a notable increase of 20.1% in customer transactions.
• - Revenue Increase: ZKH recorded net revenues of RMB 2.28 billion, a modest gain of 0.7% compared to Q3 of 2023, reflecting the overall growth in customer transactions despite a reduced contribution from its marketplace model.

Financial Performance

The gross profit surged by 5.1% to RMB 388 million, resulting in a gross margin improvement from 16.3% to 17% year-over-year. This increase was largely attributed to optimized procurement strategies and a higher ratio of private-label product sales.

Eric Long Chen, Chairman and CEO of ZKH, expressed optimism, stating that the company continues to enhance its operational quality, which has led to narrowed loss margins compared to previous periods. This progress emphasizes ZKH's focus on offering valuable products and services that align well with evolving market demands.

The Chief Financial Officer, Max Chun Chiu Lai, echoed this sentiment, noting the strategic focus on customer engagement and improving profitability metrics, highlighted by a significant increase in their cash generation capacity. The company generated net cash of RMB 160.5 million from operations during this quarter, a turnaround from net cash usage in the same quarter last year.

Challenges and Opportunities

Despite the overall positive outlook, ZKH faced challenges with its service revenues, which fell by 27.8%. This reduction is primarily linked to the declining GMV share generated from its marketplace model. The company provided insights into its strategy to address these challenges while continuing to pursue sustainable growth through innovative solutions and enhanced customer relations.

As ZKH Group Limited navigates the ongoing challenges of the MRO sector, its adaptability and commitment to efficiency indicate a strong potential for future growth. The management team remains dedicated to forging a path toward long-term prosperity, benefiting all stakeholders involved.

Looking ahead, ZKH is poised to leverage its expanded customer base and ongoing product enhancements to mitigate the impacts of market volatility and capitalize on emerging opportunities within the MRO procurement landscape.

Conclusion

ZKH Group Limited's Q3 results reflect a company that is not only weathering the storms of a competitive market but is also strategically positioning itself for future success. As they continue to innovate and respond to market demands, investors and stakeholders can anticipate ongoing developments that align with their commitment to transformation and excellence in service delivery.