Despite several cuts and tweaks to its business model and structure, it appears all is not still well with Jumia.
This is because, after two years of pressure and record losses, Jumia said it losses rose beyond forecast for the full year 2017
Jumia, Africa’s largest eCommerce company said it made a net loss of N53.3 billion for the full financial year of 2017. This is a major negative and huge difference compared to N40.5 billion reported in 2016.
Full-year revenue for Jumia came in at EUR93.8 million compared to EUR89 million reported in 2016.
There are various sides to this result and the more we look at the company’s summary result released by Rocket Internet, its parent company, the more we see more signs of worry for Jumia going forward.
Various structural changes have been applied to the business model of Jumia in the last three years. On August 30, 2016 Africa eCommerce Holding GmbH, the holding company of Jumia, was merged into Africa Internet Holding GmbH (formerly trading under Africa Internet Group).
In its usual flowery comment, Rocket Internet said in its official statement that:
In June 2016, all business models of Africa Internet Group were renamed under the Jumia brand.
It is now very clear that Rocket Internet plans to sell off the company via an IPO was a sound decision given the fact that after five years, there are no signs that Jumia would break-even before it caves-in.
Konga, Jumia’s arch-rival has also witnessed its near-end before it was sold to Zinox Group for undisclosed amounts.
While Kinnevik and Naspers have not disclosed the terms of the transactions, there are feelers that the company was sold for a ridiculously low amount with up to 99% loss on equity.
To avert losing everything they have invested, Rocket Internet is said to be rallying around its major investors in Jumia to launch an IPO in France in order to cash out.
However, there is a tricky situation as far as Rocket Internet and Jumia is concerned. It is interesting to know that as at 2016, Rocket Internet has sold off most of its equity in Jumia leaving behind about 24%. Analysts who spoke to PageOne.ng are of the opinion that ROcket Internet might not be loosing at the end of the day ” even if the IPO fails”
“Jumia, the leading online platform in Africa, grew revenue to EUR 93.8 million in 2017. Gross merchandise volume on the platform grew by 41.8% to EUR 507.0 million in 2017, driven by strong total order growth to 8.3 million orders in 2017.”
Whether this is soothing enough to Jumia’s shareholders is another matter entirely.
Oliver Samwer, CEO of Rocket Internet made a relaxing statement without Jumia in the mix that: “2017 was a very successful year for Rocket Internet with the IPOs of Delivery Hero and HelloFresh, as well as a number of successful company exits, including the sales of Goodgame Studios and Affinitas and the sale of the final Lazada tranche to Alibaba.”
He added that: “We delivered on our promise to create and crystalize value for our investors and to further improve the profitability of our selected companies.”
You will observe that there is no reference to the rumoured IPO and neither is the medium term plans concerning Jumia commented on.
For watchers of the eCommerce sector in Africa, the current position of Jumia and Konga will be the metric for future investment into the sector.