(Reuters) -China's JD (NASDAQ:JD).com Inc on Thursday warned that slowing consumption amid higher input costs could hurt business in the second half of its fiscal year even as the e-commerce firm reported quarterly results that exceeded market expectations.
The world's second largest economy has been recovering from the pandemic, but power shortages and supply chain woes have hurt factory output, with sporadic COVID-19 outbreaks hampering consumption growth.
The country's tech industry is also grappling with a regulatory crackdown for antimonopoly and security reasons and it has affected powerful players including Alibaba (NYSE:BABA) Group Holding Ltd.
"We do see quite a lot of challenges, especially in the second half of the year, relatively weak consumption demand, tight footprint change from the upstream, rising price of raw materials, COVID cases, extreme weather, et cetera," said JD President Lei Xu on a conference call.
His comments come as larger rival Alibaba fell short of market expectations for its quarterly revenue and profit and warned of slowest annual revenue growth since its debut in 2014.
The macroeconomic as well as regulatory challenges are likely hamper growth for e-commerce companies in China, which have been benefiting from heavy online shopping amid an outbreak of Delta variant.
In the reported third quarter, JD's sales in its product segment, which includes online retail, surged 22.9%.
Its net revenue rose to 218.7 billion yuan ($34.27 billion) in the third quarter, above analysts' average estimate of 216.24 billion yuan, according to Refinitiv data.
Excluding items, it earned 3.16 yuan per American depository share (ADS), compared with expectations of 2.05 yuan.
U.S.-listed shares of JD were up 3.5% in early trading.
($1 = 6.3823 Chinese yuan)