Summary of Key Points
In the first half of 2026, SF Express reported a slight increase in revenue (155.5 billion yuan, +5.89%) but a decline in profit (net profit attributable to the parent company: 5.5 billion yuan, -4.11%). Its core service, time-sensitive express delivery, experienced almost no growth (only a 0.21% increase). To address the slowdown in growth, SF Express has launched significant internal reforms: the headquarters has restructured its salary system by linking 15% of the annual cash salary to quarterly performance; at the regional level, it has merged departments and eliminated redundant positions to reduce costs and increase efficiency. The company is also reinvesting the savings in two areas with potential for long-term growth: international expansion and supply chain management. Although these businesses currently generate minimal profits, they are seen as SF Express's future growth drivers.
Detailed Analysis
1. Financial Report: Growth Slows, Pressure Forces Reform
SF Express's performance in the first half of the year was mixed: revenue increased, but profits decreased, with the core business facing stagnation.
- Revenue Growth, Profit Decline: Although revenue grew by 5.89%, net profit fell by 4.11%, indicating that it became more difficult to generate profits—either due to uncontrolled costs or reduced contributions from the core time-sensitive express delivery business.
- Core Business Stagnation: Revenue from time-sensitive express delivery amounted to 63.3 billion yuan, an increase of only 0.21%, showing little progress. This business is SF Express's main source of revenue, and its lack of growth has impacted overall performance.
- A Slight Improvement in the Second Quarter: Net profit in the second quarter increased by 17% year-over-year, and non-recurring gains also showed improvement, suggesting that the reforms are starting to take effect, although the company is still in a period of adjustment.
In short, external growth opportunities are limited, so SF Express must look for ways to increase profits internally.
2. Headquarters Salary Reform: Not a Pay Cut, but a Change in Distribution
SF Express began by altering the salary structure for its headquarters staff, linking 15% of the annual cash salary to quarterly performance.
- Graduated Reward System: The performance evaluation is divided into seven levels (A to C), with level A receiving 1.1 times the annual salary and level C receiving 0.9 times the annual salary. This means that employees in the higher performance categories receive more, while those in the lower categories receive less, potentially motivating everyone to improve their performance.
- Inspiration from Internet Giants: This approach is similar to JD.com's “20 Salary” system, where more of the salary is linked to performance. It ensures that employees' earnings are directly tied to their value, encouraging better performance.
3. Regional Reforms: Consolidating to Reduce Costs
While the headquarters focuses on restructuring, the regional offices are working to reduce costs by merging areas and eliminating redundant positions.
- How It Works: For example, regions like Central Zhejiang and Eastern Guangdong were merged, resulting in the elimination of redundant administrative and financial positions. Internal employees were reassigned, while outsourced workers were either transferred to other roles or compensated.
- Reasons for the Reforms: By combining regions, SF Express can eliminate duplicate management and staffing costs. Although there are initial expenses, such as reassignment fees, these reforms can lead to long-term cost savings—for instance, reducing the number of regional managers can save hundreds of thousands of yuan annually.
- Implications for Outsourced Workers: Some outsourced workers had to switch from back-office roles to frontline positions, increasing their workload and potentially leading to compensation disputes. However, this is a necessary part of SF Express's effort to optimize its structure.
4. Reinvesting Savings in Growth-Oriented Areas
SF Express is investing the savings in two areas with potential for long-term growth: international expansion and supply chain management.
- International Expansion: The supply chain and international business grew by 15.6% (39.5 billion yuan, 25.5% of total revenue), with international express delivery growing by 60% and international supply chain by 155%. However, profits were only 30.31 million yuan, due to high initial investment in building overseas infrastructure and logistics.
- Supply Chain Transformation: SF Express is moving from providing basic courier services to offering customized supply chain solutions for industries like automotive and pharmaceuticals. This requires specialized knowledge and experience to develop standardized solutions, which is a long-term investment.
These two areas may not generate immediate profits, but they have the potential to become SF Express's next growth drivers.
Conclusion
SF Express is facing challenges in external growth and is therefore focusing on internal reforms to reduce costs and reinvesting in areas with future potential. The company is not short of funds but is prioritizing investments that will drive long-term growth. For employees, this means a shift from a traditional “equal distribution of benefits” to a performance-based compensation system. For SF Express, this transition represents a shift from scale expansion to quality improvement.