Shares of ZTO Express (Cayman) Inc. (NYSE:ZTO) fell about 2.3% after the company reported fourth-quarter results that topped analyst forecasts, with investors focusing instead on declining profitability margins.
The Chinese parcel delivery group reported adjusted earnings per American Depositary Share of RMB3.31 ($0.47) for the quarter, surpassing the analyst consensus estimate of RMB3.13. Revenue came in at RMB14.51 billion ($2.08 billion), up 12.3% year over year from RMB12.92 billion and above expectations of RMB13.99 billion.
Despite the stronger top-line performance, adjusted net income slipped 1.4% to RMB2.69 billion ($385.3 million), compared with RMB2.73 billion in the same quarter a year earlier. Gross margin also narrowed, falling to 25.4% from 29.1%.
Parcel volumes rose 9.2% year over year to 10.56 billion during the quarter, outpacing the broader industry. Core express delivery revenue climbed 12.4%, supported by higher shipping volumes and a 2.9% increase in average unit pricing. Revenue from key accounts jumped 71.5%, largely driven by growth in e-commerce return shipments.
Although efficiency gains helped lower unit transportation costs by 7.5%, other expenses surged 66.8% to RMB3.85 billion ($550.5 million), mainly reflecting costs associated with servicing large key-account customers.
“ZTO prioritized quality of services and customer satisfaction, and our volume growth outpaced the industry average to reach 10.6 billion parcels,” said Meisong Lai, Founder, Chairman and CEO. “Adjusted net income was 2.7 billion which was in line with expectations.”
For the full fiscal year 2025, ZTO reported revenue of RMB49.10 billion ($7.02 billion), representing a 10.9% increase from the prior year. Adjusted net income declined 6.3% to RMB9.51 billion ($1.36 billion).
Looking ahead, the company expects parcel volumes to grow between 10% and 13% in 2026, equivalent to approximately 42.37 billion to 43.52 billion packages.
ZTO’s board also approved a semiannual dividend of $0.39 per ADS for the six months ending December 31, 2025, and authorized a new $1.5 billion share buyback program to be executed over the next 24 months. The company said it aims to return at least 50% of the previous year’s adjusted net income to shareholders annually through dividends and repurchases.