Jumia sinks deeper into losses as revenue rises

JUmia

Africa’s largest eCommerce company, Jumia, said its losses for the first half 2018 financial year rose beyond estimate, a signal that the company has many more years to turn a profit.

Rocket Internet, the parent of the troubled eCommerce company said its share of the loss attributed to its 28% stake in Jumia was EUR13.6 million which means the estimated loss of the company for the half year was about EUR60 million.

The full loss for the period could not be ascertained because Rocket Internet has stopped showing the full profit or loss of the company.

Despite this sequence of disappointing bottom line for the eCommerce company’s revenue for the period rose sharply by 62% year on year. While this is a very positive development, the company has just shown that it needed to exit or not even get into all the business it sold off in the last two years.

For the period under review, Jumia reported a gross margin value, was EUR 163.4m in Q2 2018, representing 61.9% YoY growth in absolute Euro terms (80.9% on constant currency basis). The number of active consumers reached 2.8m as of H1 2018, growing by 78.7% YoY.

The company said the growth “illustrates Jumia’s deep local expertise, its strong brand and its powerful platform.” While this is a very impressive result, its EBITDA shows Jumia still has a long way to go in shedding off huge debt in its balance sheet.

Jumia said it will continue to focus on driving “more sellers and more products and services to the platform in order to increase the attractiveness to consumers in terms of selection and price. Moreover, as part of its continued commitment to driving attractiveness to consumers, Jumia has recently introduced a number of new digital payment solutions and services, such as airtime recharge or utility payments, which help consumers save time and money on more types of daily needs.”

The company said current “momentum with consumers confirms its position as Africa’s leading commerce platform and showcases the strong potential of the continent, where there are over 450 million internet users and 1.2 billion people.”

How Jumia intends to latch on this huge potential remains to be seen given its inability to cut losses after shedding more weights and selling off non-performing business units and startups.

There are more confusion as to what Rocket Internet plans to do with its stake in Jumia. Earlier this year, there were reports that it plans to sell off its stake via a Paris listing that will materialise this year end. The company has not denied or confirm the rumour. Other investors have also being mute on the future of Jumia. MTN, AXA, Orange, Millicom and Goldman Sachs are other shareholders in Africa Internet Holding GmbH, the joint venture for Jumia shareholders.

Konga, Jumia’s major competitor was earlier this year sold off to Zinox Group, a local IT and consulting group in Nigeria for less than $5 million according to people familiar with the matter.