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Operator
Good day, and welcome to the ZTO Express Fourth Quarter and Fiscal Year 2023 Financial Results Announcement Conference Call. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Miss Sophie Li, Director of Capital Markets. Please go ahead, ma'am.
Sophie Li - IR Director
Thank you, operator. Hello, everyone, and thank you for joining us today at 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 Mrs. Huiping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Mrs. 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 and the 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 US 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.
Meisong Lai - Founder, Chairman & CEO
[Interpreted] Hello, everyone. Thank you for participating in today's conference call. For the First Quarter of 2023, ZTO's customer satisfaction level continue to ramp among the industry talks. Our volume reached RMB 71 billion, which increased 32% over last year or 4.8 percentage points above industry average, and we achieved RMB 2.2 billion of adjusted net income for the quarter.
In 2023, China Express Delivery industry maintained relatively strong growth momentum, yet price competition, particularly in the production regions worth of the year. We insisted on keeping the underlying pricing policies across the network consistent, while taking necessary measures in certain markets to maintain base volume. Our annual parcel volume grew 23.8% to reach RMB 32.2 billion.
Core express delivery unit price declined $0.16 for the year. That was fully absorbed by cost productivity gain, thanks to digitization and process management that have been continuously lifting operational efficiencies. Together with effective corporate cost control, we raised the adjusted operating margin rate by 4.3 percentage points to 26.7% for the year. As a result, the adjusted net income for the year was RMB 9 billion, which increased 32.2% over 2022.
The ZTO has been consistently focused on balance among quality of services, market share and earnings. The goal of any enterprise is to create value, and there is no absolute give or take between scale or profit. Instead, there is always relative trade-offs or balanced among competing priorities. Facing microeconomic uncertainties, mix of e-commerce structure shift and industry competitive dynamics, we focused on improving overall service quality and the differentiated service capability.
We continue to eradicate on profitable volume, we direct customers to capable network partners, increased incentives to protect critical market presence. Our overall performance results were solid and particularly so in unit economics and total profit expansion. Even though we did not gain market share against what was targeted in the beginning of the year, we believe our results were consistent with the balanced approach to strategies and adaptive to current market environment.
In a longer-term perspective, Extra delivery is like running a marathon. Stable and healthy development of the partner network is the foundation of ZTO's longevity. Equitable and fair policies stem from our shared success culture and it's important for us to successfully implement initiatives, including partner capacity and capability building, existing facilities upgrade and the resource utilization enhancement, last mile expansion and better customer reach and the service quality and customer satisfaction improvement.
Focusing on our own affairs, we achieved another year of significant cost of productivity gain. Total unit costs decreased $0.17 within which transformation decreased to $0.06 and $0.05. Other than benefiting from increasing scale leverage, we have continuously implemented digitization and lead management initiatives in recent years and generated meaningful results.
Through clearly defined growth and responsibilities and associated measurement metrics, labor efficiencies and the resource utilization quickly improved. Better visibility in time lead identification of issues matched up with strong execution. We have quickly improved our ability to quickly adjust, solve problems and drive better results. China Express delivery experienced a stable growth for the first 2 months of 2024.
The rise of new e-commerce channels, such as video streaming and retail social network stimulated mass consumption. Even though price stabilization and the increase has yet to arrive, the shift from high quantity towards high quality is the undercurrent that is inevitably taking shift. Be the best we can, focusing on safety healthy volume base and a fair allocation of economic interest among brand operators, (inaudible) and express couriers, our men's focuses of our work going forward.
The following are some of the key initiatives. First, support and enable improvements in frontline operating efficiencies, improve transparency and fairness of pricing policy, design of policy and deploy swiftly to maximize utilization of idle resources, incentivized volume acquisition with improved effectiveness.
Second, optimize scale advantage, reduce the level of aggregation and sort to the smallest delivery unit possible, reduce last mile delivery costs and improve productivity, help always to build out capacity and capabilities that fit well with that of our sortation hub. Ensure carriers get to take home the lion's share of the profit from incremental non-e-commerce packages they help to market and for do increased direct linkage to last mile to reduce cost and improve delivery efficiency, Accelerated reduction of sortation frequency.
Third, improve service quality meeting and individualized needs, improve timeliness of pickup and delivery, including service to door, reduce damages and loss and stay on top of quality of service and customer satisfaction. Fourth, enhance the accuracy and the timeliness of data and analysis, improved utilization of digitization tool to help encounter the effectiveness of operational management.
We believe that going forward, the China Express industry will continue to bifurcate by scale and profitability, plus increasing concentration. National economic policies have been consistently supportive of express delivery companies to scale up and improve efficiencies and risk quality of earnings. Plenty of work need to be done to measure up to develop the countries.
Underpinned with digitization and environmental consciousness in its transformation from quantity to quality, express delivery businesses will be an integral part of all aspects of production, distribution and consumption providing high-quality products and services and becoming an important driving force for modernization of manufacture manufacturing, agriculture and development of urban and rural markets in China.
There are positive growth prospects and earnings upside to the industry. Our strengths today will serve as foundation for comprehensive competitiveness in the future, ensuring our relevancy and most importantly, affirming our commitment and confidence in creating lasting value for our business partners and shareholders. Now let's welcome our CFO, Miss Yan, to take us through our financials and outlook.
Huiping Yan - CFO
Thank you, Chairman and thank you, Sophie. Hello, everyone, to the call. As I go through our financials, please note that unless specifically mentioned, all numbers quoted are in RMB, the percentage changes refer to year-over-year comparisons. Detailed information on our financial performances, unique economics and cash flow are posted on our website, and I will go through some of the highlights here.
We achieved volume target by growing parcel volume 32% to RMB 8.7 billion for Q4 and 23.8% to RMB 30.2 billion for the year with firm execution of our consistent strategies. Our adjusted net income grew 4.4% to RMB 2.2 billion and 32.3% to RMB 9 billion for the quarter and the year, respectively, while we maintained a high quality of services and customer satisfaction.
Total revenue increased 7.6% to RMB 10.6 billion for Q4 and 8.6% to CNY 38.4 billion for the year. ASP for the core express delivery businesses decreased 18.2% or RMB 0.27 for Q4 and 11.3% or RMB 0.16 for the year. During the Fourth Quarter, we did not raise price as would take place in the past, during e-commerce promotional period, given price competition and our readiness to process concentrated high volume.
ASP decline was attributable to a mix shift in KA volume and increase in volume incentives and a lower average weight per parcel. Total cost of revenue was RMB 7.5 billion and RMB 26.8 billion, respectively, for Q4 in 2023, which increased 5.5% for Q4 and 1.6% for the year.
Combined unit cost of sorting and transportation decreased 14.9% or RMB 0.13 for Q4 and for the year was 13.2% or RMB 0.11, benefiting largely from economies of scale. In addition, unit cost of mine haul transportation decreased 11.5% to RMB 0.46 for Q4 and decreased 4.1% to RMB 0.45 for the year, driven by more effective route planning in conjunction with low rate improvements without affecting timeliness and decreases in fuel prices also helped.
Unit sorting costs decreased 20.1% to RMB 0.26 and 15% to RMB 0.27 for Q4 and the year, respectively. Driven by increased automation and labor efficiency gains achieved through standardization in operating procedures and optimization of performance metrics. Gross profit increased 12.8% to RMB 3.1 billion for Q4 and increased 29% to RMB 11.7 billion for 2023 as a combined result of increased volume offsetting ASP decline plus added benefits from cost productivity gain.
Gross profit margin rate increased 1.4% to 29.5% and increased 4.8 points to 30.4% for the fourth quarter and the year, respectively. SG&A excluding SG&A, excluding SBC, increased 24.9% and to RMB 0.7 billion for Q4 and increased 14.3% to RMB 2.2 billion for the year. SG&A expenses, excluding SBC as a percentage of revenue combined as a percentage of revenue remained low at 6.6% for Q4 and 5.6% for the year as our corporate cost structure remained lean and stable.
Income from operations increased 12% to RMB 2.8 billion for Q4, and increased 29.4% to RMB 10 billion for the year. Associated margin grew 1 point to 25.9% and 4.1 points to 26% for the year, indicating that we have achieved the goal of improving quality of earnings to the level better than 2019 prior to COVID-19 pandemic. Operating cash flow was RMB 3.9 billion for the quarter and RMB 13.4 billion for the year.
Adjusted EBITDA for Q4 and 2023 was RMB 3.7 billion and CNY 14.1 billion, respectively. Capital expenditures for Q4 totaled RMB 0.9 billion, and the annual CapEx came in at RMB 6.7 billion in 2023, indicating that we have achieved another year of free cash flow. The company has now established a regular dividend policy and has announced a RMB 0.62 per share cash dividend for 2023 to shareholders on record as of April 10, 2024.
This dividend represents a 40% payout ratio and a 68% increase from dividend from last year. For 2024, the company plans to declare and pay cash dividends semiannually, no less than 40% of the company's distributable profit for the fiscal year. In addition, the company also announced an upsize 2016 share repurchase program by $500 million to bring the total authorization amount of the current program to 2 billion and extend the program by another 12 months until June 30, 2025.
Combining share repurchase and dividend, we are committed to steadily improve shareholder returns. Now moving on to business outlook. We anticipate the express delivery industry in China would grow 10% or more in volume in 2024, and we will maintain our leadership effort in industry transformation towards profitable growth with both quantity and quality.
Balanced approach to service quality, volume and earnings is our consistent strategy under the near-term conditions surrounding economic development and industry competition, our recalibrated strategy is to target a healthy earnings goal while improving quality of services and customer satisfaction and attain appropriate market share expansion.
For 2024, the company expects its parcel volume to grow in the range of RMB 34.73 billion to RMB 35.64 billion, representing a 15% to 18% increase year-over-year. These above estimates represent management's current and preliminary view, which are subject to change. This concludes our prepared remarks. Operator, please open the line to calls and questions. Thank you.
Operator
We will now begin the question and answer session. (Operator Instructions). And the first question will come from Ronald Keung of Goldman Sachs.
Ronald Keung - ED & Head of Asia Internet Research
(foreign language) Thank you management. I have 2 questions. One is that you've shared your parcel volume growth for expectation for this year. But what is your expectation on the competition, particularly on the pricing front and whether we think what is the view on EBIT or profit possible trend this year, given that we have achieved quite a stable to slightly up possible in 2023, the intense competition? Second is on CapEx. So what is our CapEx expectation for this year? And given that the cash flows, do you see a higher dividend payout room in the medium term?
Meisong Lai - Founder, Chairman & CEO
(foreign language)
Sophie Li - IR Director
Let me first translate for the Chairman for your first question, and then I'll answer the second part with our dividend.
Meisong Lai - Founder, Chairman & CEO
In 2024, the government or the Bureau of Post have announced a 8% growth expectation. And we believe in our earlier remarks that we think at least 10% is possible.
And our goal is to grow 15% to 18%. So that's clearly above the industry average. We think that from a price perspective, the competition in a longer run will subside because it is a natural process that any industry would go through. The low price market share obtained from low price is not sustainable. The express delivery industry are accelerating their differentiation with the leading companies, having clear advantage in scale, capital strength in network stability.
The trend of strong getting stronger is quite clear and quite obvious as industry concentration continues to increase, leading express companies will reach market value that is much greater than what it is today. The competition will go from single express delivery capabilities to comprehensive logistic capabilities. And the DTO having the same goal in taking the leadership in the transformation from quantity only to combine with quantity and quality.
We hope to develop differentiated price as well as differentiated products, including timeliness product, reverse logistics so that we can build early move advantages to really stand out with quality of services because we believe that is the key to obtaining market share in the long run. There are several transformations or changes or shifts in the industry.
As I mentioned earlier, we have the quality towards quantity and quality. And we are also observing a comprehensive competitive advantages being built. Looking at the first and second month situation for 2024, we think our strategy remains the same, focusing on a balanced approach to improve our quality of services as priority. And then looking at the balance between market volume market expansion as well as the earnings goal.
We do on all 3, and it is in the current environment, a matter of allocating our resources and putting our attention to achieve the most optimal and appropriate goals. Specific work has been cut out for us in addition to the summary that we've given in our prepared remarks, within our goal and the strategy really relates around the following 5 specific tasks, optimize service quality, promoting diversified products, further shortening the delivery time and upgrade customer service experience.
Two, ensuring policy transparency and equitable policy tapping into the incremental volume potential of outlets and increase the profitability of the outlet. Three, focusing on our capability building and capacity building establish their sortation and delivery functions and increase the proportion of visibility linkage towards the last mile. Implementing last mile policy being the increasing portion of individual parcels, which is what we're referring to is non-e-commerce retail parcels.
And then five, strengthening last mile capacity, building improvements in our ability to pick up, deliver to door as well as meeting individualized needs of our customers. Now let's move on to the second part of your question. The 40% payout ratio that we've announced, as we mentioned that in as the company achieved free cash flow, and we believe our cash generation will allow us to continue to generate strong free cash flow.
We have clearly distinctly set ourselves up for a company with growth as well as return to our shareholders. 40% is certainly a start, going forward, combined with dividends, share buyback, we are committed to provide healthy and consistent return to our shareholders that are going to be increasing steadily going forward. I hope that answers your questions, Ronald.
Operator
Next, we have Fan Qianlei of Morgan Stanley.
Qianlei Fan - VP
(foreign language) Let me translate the next slide. Thank you management for taking my question. Congratulations for the new high in the annual profit since listed. And we do appreciate a lot the management efforts in terms of increasing shareholder return. I have 2 questions. The first question is related with competition.
So what's management's expectation on the intent of the competition? Have we seen the worst already or not yet? We have already seen a few smaller players has been competing less aggressively in this year compared with last year. Do you think that could be the new normal or competition could escalate a gain if industry volume softens? What's the expectation on the unit profit outlook on a year-on-year basis?
And the second question is about to build delivery requirements from regulators. Have you observed any changes to operations? What's the potential impact on cost and competition dynamics?
Meisong Lai - Founder, Chairman & CEO
Thank you for your question. Yes, we have observed that the competitive environment has been shifting in accordance with the economic development and particularly e-commerce development. We believe, again, the express delivery business operation and the enterprise goal is like running a marathon focusing on being the best of ourselves is most important and feasible.
With strong cost advantage, better quality of services and timeliness in our services and better operating efficiencies, we will become the winner of the full rate. The concentration of the industry continues to take place. Looking at the current situation. Everybody is still seeking a market share gain. And for ZTO this year, as we have mentioned earlier, the strategy is consistent, and we are recalibrating across the 3 priorities.
So for this year, we are focusing more on improving the quality of services, providing customer satisfaction with differentiated products and services and meeting individualized and customized needs. So ensuring quality improvements and attaining appropriate earnings while expanding our market presence is our strategy going forward.
The unit economics, if I may add the comments, everything is laid out in front of us as we further strengthen our productivity gain and supporting our network partners to grow last mile expanding their capabilities, we are able to attain our goal of continued profit expansion. On your second question, yes, indeed, there are new rules that are being issued. And we believe that the emphasis is continuing on improving customer satisfaction and logistic experiences, which is consistent with what we've always been working on.
And particularly so as we establish near 110,000 last mile post, it is indeed to help not only our network partners to improve their quality of earnings, but most importantly is to help improve last-mile service quality to door delivery capability, meeting the demand individualized as well as customized. So in the longer run, this is a good thing for the industry as we are shifting towards more of quality of services. So we will continue our efforts going forward in this arena.
Operator
Next, we have Li Hung Chang of Haitong Securities.
Li Hung Chang
(foreign language) First of all, congratulations to company for achieving good performance in the fourth quarter and throughout the year. Since the beginning of this year, we have observed strong growth among our peer companies. I'd like to know the areas in which the company is undergoing transformation or an adjustment. It's our nonpoint strategy still impact, considering the market environment, are we planning to adopt a more aggressive pricing strategy to gain business volume? Thank you.
Huiping Yan - CFO
Indeed, a very clear answer to your question is our long-term strategy, our consistent strategy remains the same. And I think our fourth quarter results as well as our plan for 2024 clearly indicates that our strong belief, first of all, that price attained low-price attaining market share is not sustainable.
And it is important, again, as the leadership role, taking a leadership role in the industry to grow from quantity to quality as well in combination with quantity going forward is our goal. And so we believe that the price competition in combination with the earlier question asked by (inaudible), is that, yes, indeed, there are indications or expressions by many of the industry players that they will also follow the trend, follow the transformation to go from quantity only to more quality. And we believe this is a process that will be taking place for the near term.
And the overall goal of our business remain to keep our network partners an interest amongst all the players, including our network partners allocation being equitable and market share is important, but it's not the only thing, profitable growth is what we are aim to achieve going forward
Operator
Next with Aaron Luo of UBS.
Aaron Luo - Analyst
(foreign language) Let me translate myself first. And as Mr. Lai and Mrs. Yan has mentioned earlier, we also noted that we have a long-term focus on improving our service quality, product mix and pushing for further product differentiation.
Could you please shed more light on like what kind of initiatives we will take for this year? And what are those advantages we have compared to peers? And the last question would be, do we have any like quantitative goals on this front? Thank you so much.
Meisong Lai - Founder, Chairman & CEO
Thank you very much for your question. The overall strategy, we have mentioned earlier that we will continue to focus on our own. And at the headquarter level, we first have put forth the quality of services in the front and managing the relationship between profit and market share.
At the sortation centers level, we are focusing on better allocation or more efficient allocation and resources to meet the varying interest of sortation center outlets as well as our network couriers. For ourselves, we will further our efforts and initiatives to improve the transit efficiency and capability. For example, as we mentioned earlier, reduced the total process time increase the quality by reducing losses and delay and fully utilize our resources.
To the outlets, we think that many initiatives are there to, first of all, improve the clear allocation of roles and responsibilities between the sortation center, the outlet and the couriers so that they each individually for every of their work segments will improve quality as well as efficiencies. For our couriers, we distinctly laid out policies and laid out initiatives to improve linkage as well as ensuring that they are able to, as courier motivated or incentivized to attain more non-e-commerce and retail shares by allowing them to gain the lion's share of the marketing price so that they are working for themselves instead of nondifferentiated compensated with no differentiation from pickup or delivery fee.
With that, we are clearly on an overall standpoint, having objectives for the last mile to achieve 3 areas of go. One is to reduce overall cost and then two, distinctly improve service to door on-demand services to meet the customized individual demand and also improve connectivity with our customers so that couriers are able to gain access to more retail volume and retail packages.
And then thirdly, at the appropriate location in time, we want to introduce commercial opportunities to our last mile post, so that they are also improving the quality of their earnings. On an overall basis, we have set our volume growth for the business to be 15% to 18% for the year. And certainly, our retail volume or noneconomic volumes growth goal is significantly higher than this 15% to 18%, so that we hope to pull away from the senseless price competition and become truly differentiated from the Tongda Group.
And with longer term and improved service quality and brand distinction. I hope that answers your question. So I think we are at line 30. So thank you very much, everybody, for joining today's call. We welcome further discussions and the elaboration of our intention, which is very clear in the current environment of how we grow our business, how we develop our brand and improving our shareholder returns. Thank you again for joining us today.
Operator
And we thank you to the rest of the management team for your time also today. The conference call has now concluded. Thank you again for attending today's presentation. At this time, you may disconnect your lines.
Disclaimer: [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.