Economy
Business Rebalancing, Promotional Discipline Drive Jumia’s Q4 Growth
By Dipo Olowookere
The decision of the management of Jumia to cut its costs and rebalance its business mix has paid off and the financial results of the company in the fourth quarter of 2020 are the visible evidence to show for it.
In the period, the leading e-commerce platform lowered its fulfilment, sales & advertising and general & administrative expenses (excluding share-based compensation) by 18 per cent, 34 per cent and 36 per cent respectively and as a result, its adjusted EBITDA loss contracted by 47 per cent year-on-year to €28.3 million.
This is making the journey of Jumia towards profitability looking bright as in Q4 2020, it reported a gross profit of €27.9 million, translating to a year-over-year increase of 12 per cent, while the gross profit after fulfilment expense reached a record of €8.4 million.
In the results released on Wednesday, the company, which has been described as Africa’s Amazon, however, said it had an operating loss of €40.0 million in Q4 2020.
But the total payment volume on JumiaPay reached €59.3 million, increasing by 30 per cent year-over-year, while the on-platform TPV penetration increased from 15.6 per cent of GMV in the fourth quarter of 2019 to 25.7 per cent of GMV in the fourth quarter of 2020.
In addition, JumiaPay transactions increased by 10 per cent from 2.4 million in the fourth quarter of 2019 to 2.7 million in the fourth quarter of 2020.
Overall, the report showed that 33.1 per cent of orders placed on the Jumia platform in the fourth quarter of 2020 were paid for using JumiaPay.
Furthermore, Jumia’s annual active consumers reached 6.8 million in the fourth quarter of 2020, up 12 per cent year-over-year with continued growth in both new and returning customers.
This cascaded to increased sales on the platform, as Jumia’s 2020 Black Friday sales records surpassed that of the previous year. The platform recorded 1.5 billion page views, up 34 per cent when compared to 2019, while video content registered almost 100 million views, 3 times higher compared to the 2019 event.
The financial results showed that more than 41,500 sellers participated in the 2020 event, with the top 20 sellers registering 141 per cent growth in items sold in the 2020 Black Fridays compared to the same period in 2019.
“While 2020 has been a challenging year operationally with COVID-19 related supply and logistics disruption, it has been a transformative one for our economic model, as we firmly put the business on track towards breakeven.
“We continued to make significant strides towards profitability during the fourth quarter of 2020. Gross profit after fulfilment expense reached a record €8.4 million during the quarter.
“In parallel, efficiencies across the full cost structure allowed us to decrease fulfilment, sales & advertising and general & administrative expenses (excluding share-based compensation) by 18 per cent, 34 per cent and 36 per cent respectively, year-over-year.
“As a result, adjusted EBITDA loss contracted by 47 per cent year-over-year, reaching €28.3 million. In addition, we raised approximately €203 million in a primary offering in December 2020,” commented Jeremy Hodara and Sacha Poignonnec, co-CEOs of Jumia.
The brand also recorded impressive figures on platform monetization as the Jumia Logistic service, which was opened to third parties in 2020, shipped almost half a million packages on behalf of more than 270 clients.
According to the report, Jumia is also making meaningful progress in the reduction of the overall rate of cancellations, failed deliveries and returns (CFDR).
“The CFDR rate as a percentage of GMV improved from 30 per cent in 2019 to 25 per cent in 2020. The CFDR rate as a percentage of orders improved from 22 per cent in 2019 to 16 per cent in 2020.
“The CFDR rate is typically lower when expressed as a percentage of orders than GMV as higher average item value orders tend to show higher CFDR rates.
“As a result of the significant improvement in CFDR ratios, the year-over-year trajectory of GMV and orders after CFDR compares favourably versus pre-CFDR.
“GMV was down 19 per cent in 2020 while GMV after CFDR was down 12 per cent and orders increased by 5 per cent while orders after CFDR increased by 14 per cent over the same period,” a statement from the firm said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange fell by 0.39 per cent on Monday, January 12, after it closed higher in every trading day of last week.
The loss recorded yesterday took out N8.5 billion from the unlisted securities market, closing at N2.184 compared with the preceding session’s closing value of N2.193 trillion.
In the same vein, the NASD Unlisted Security Index (NSI) went down by 14.2 points during the session to 3,651.48 points from the 3,665.68 points it finished last Friday.
The decline was influenced by three securities, with Afriland Properties Plc down by N1.55 to end at N14.75 per unit compared with the previous N16.30 per unit, and NASD Plc declining by N1.00 to N59.00 per share from N6.00 pr share, as Food Concepts Plc slid by 34 Kobo to finish at N3.06 per unit versus N3.40 per unit.
On the flip side, three securities gained weight, with FrieslandCampina Wamco Nigeria Plc appreciating by N6.23 to N68.70 per share from N62.47 per share, Central Securities Clearing System (CSCS) Plc added 45 Kobo to close at N43.07 per unit versus N42.62 per unit, and Geo-Fluids Plc gained 2 Kobo to settle at N6.84 per share versus N6.82 per share.
During the session, the trading volume soared by 826 per cent to 4.03 million units from 434,845 units, the trading value skyrocketed by 579.1 per cent to N46.8 million from N6.9 million, and the number of deals jumped by 118.2 per cent to 48 deals from 22 deals.
When trading activities closed for the day, CSCS Plc remained the most active stock by value on a year-to-date basis with 1.5 million units exchanged for N57.6 million, followed by Geo-Fluids Plc with 6.4 million units valued at N43.3 million, and FrieslandCampina Wamco Nigeria Plc with 379,749 units worth N24.4 million.
In terms of volume, Geo-Fluids Plc led with 6.4 million units sold for N43.3 million, trailed by Industrial and General Insurance (IGI) Plc with 2.9 million units traded for N1.9 million, and CSCS Plc with 1.5 million units valued at N57.6 million.
By Adedapo Adesanya
The Naira appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 12 by N1.71 to trade at N1,421.46/$1, in contrast to the preceding session’s N1,423.17/$1.
However, the local currency further depreciated against the Pound Sterling in the same market window yesterday by N3.81 to close at N1,915.84/£1 compared with last Friday’s price of N1,912.03/£1 and lost N3.55 on the Euro to quote at N1,661.68/€1 versus N1,658.13/€1.
In the same vein, the domestic currency depleted against the Dollar at the GTBank FX desk during the trading session by N4 to to settle at N1,431/$1 compared with the previous trading day’s rate of N1,427/$1 and closed flat in the black market at N1,490/$1.
The appreciation of the Nigerian currency against its American counterpart in the official market was supported by foreign portfolio investors’ inflow with support from non-bank corporate supply, leaving it within the N1,350/$1 – N1,450/$1.
“We anticipate that the CBN will emphasise exchange rate stability over rapid appreciation through 2026, supported by prudent policy execution and effective reserve management,” Coronation Merchant Bank research said in an update.
Despite a differential against other currencies, market analysts noted that stronger external inflows from FPIs, improving current account dynamics, and more disciplined FX management by the authorities, will give the Naira stronger footing.
As for the cryptocurrency market, most tokens tracked by this newspaper were largely down with traders seeing the market settle into equilibrium after leverage was flushed and liquidity thinned.
Market analysts noted that with spot demand soft and no clear institutional catalyst, price discovery continues to shift to where thinner liquidity and narrative trades can overwhelm fundamentals.
Litecoin (LTC) lost 4.6 per cent to trade at $76.25, Solana (SOL) depreciated by 1.6 per cent to $140.23, Cardano (ADA) slid by 1.4 per cent to $0.3914, Ripple (XRP) slumped by 0.9 per cent to $2.05, Ethereum (ETH) went down by 0.8 per cent to $3,128.74, and Dogecoin (DOGE) decreased by 0.5 per cent to $0.1392.
On the flip side, Binance Coin (BNB) appreciated by 0.3 per cent to $908.87, and Bitcoin (BTC) increased by 0.1 per cent to $91,916.73, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited kicked off the week on a positive note after it closed higher by 0.58 per cent on Monday amid sustained buying pressure.
The stock market was bullish as a result of bargain-hunting activities across the key sectors of the bourse, with the energy index growing by 1.49 per cent.
Further, the insurance space expanded by 0.88 per cent, the banking counter improved by 0.86 per cent, the industrial goods sector gained 0.81 per cent, the commodity segment soared by 0.79 per cent, and the consumer goods landscape advanced by 0.57 per cent.
Consequently, the All-Share Index (ASI) went up by 946.61 points to 163,244.69 points from 162,298.08 points and the market capitalisation surged by N745 billion to N104.521 trillion from N103.776 trillion.
The market breadth index of Customs Street was positive yesterday with 49 price gainers and 20 price losers, representing a strong investor sentiment.
The quintet of eTranzact, UPDC, McNichols, Red Star Express and RT Briscoe led the gainers’ chart during the session after chalking up 10.00 per cent each to sell for N16.50, N5.50, N6.05, N11.55, and N3.96, respectively.
However, Champion Breweries topped the losers’ table after it shed 8.51 per cent to quote at N15.05, Eunisell shrank by 8.01 per cent to N156.20, Ikeja Hotel crumbled by 8.00 per cent to N36.80, Guinea Insurance depreciated by 7.30 per cent to N1.27, and Omatek moderated by 3.13 per cent to N1.24.
The activity chart had Sovereign Trust Insurance on top after a turnover of 307.5 million shares valued at N1.0 billion, Fidelity Bank followed with 158.4 million equities sold for N3.1 billion, Linkage Assurance traded 118.7 million stocks worth N213.9 million, Mutual Benefits exchanged 31.5 million shares for N130.4 million, and Lasaco Assurance transacted 31.0 million stocks valued at N79.6 million.
At the close of trades, a total of 1.2 billion equities worth N19.2 billion exchanged hands in 59,359 deals versus the 624.1 million equities valued at N18.5 billion traded in 43,816 deals last Friday, showing a spike in the trading volume, value and number of deals by 92.28 per cent, 3.78 per cent, and 35.47 per cent apiece.
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