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 extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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