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.
NGX All-Share Index Outperforms Inflation Over Three Years
The 3-year trailing performance of the All-Share Index (ASI) of the Nigerian Exchange (NGX) Limited surpasses the average inflation during the same period.
The annual inflation measured by the Consumer Price Index (CPI) released in September by the National Bureau of Statistics (NBS) was 20.52 per cent in August 2022.
Meanwhile, the NGX ASI, a market capitalisation weighted index of all companies listed on the NGX’s platform, had a year-to-date performance of 15.68 per cent during the same period. This could be misleading about the market performance until you view it through a longer-term lens.
British Economist, Benjamin Graham, made a quote popularly used by Warren Buffett, the Fund Manager of Berkshire Hathaway Inc and widely regarded as the best living investor: “Markets are a voting machine in the short term, and a weighing machine in the long run.” On a 3-year trailing basis, the NGX ASI has outperformed the CPI average in the same period, ensuring that investors with a longer-term hold on their investments remain in the positive region.
Analysis of data of closing prices gathered from the NGX’s website showed that the index has a 3-year moving average of 22.97 per cent, compared to an inflation average of 15.72 per cent.
The year 2022 has been a slow year for global stocks due to volatility resulting from the hiking of interest rates by central banks in the United States and Europe amidst inflationary pressures.
The NGX ASI’s 15.62% YTD return is a significant positive performance compared to the US S&P 500, which has plunged by 22.46% or the FTSE 100, which has declined by 7.68%, according to Google Finance. The local bourse has exhibited resilience and insulated investors from negative return on investment over three years.
Laolu Martins Was Minority Shareholder of Bukka Hut—Management
By Modupe Gbadeyanka
The management of an online restaurant in Nigeria, Bukka Hut, has clarified that one of its late directors, Mr Laolu Martins, was a minority shareholder in the company.
On Wednesday, it was reported that the deceased breathed his last in Lagos. He was said to have co-founded the firm with Mr Rasheed Jaiyeola, who is the Chief Executive Officer.
The deceased was reportedly invited to join the firm by Mr Jaiyeola, who jointly owns majority shares of the company with his wife and sister.
Mr Jaiyeola and Mr Martins were co-owners of the Nigerian International Securities Limited (NISL) before the former resigned from his position as director to focus on Bukka Hut in 2016.
According to the statement from the organisation, Mr Jaiyeola established Bukka Hut but only invited the deceased and two others to invest in the eatery when it was established.
“To clarify, Rasheed Jaiyeola is the founder/CEO of Bukka Hut, a proudly Nigerian brand he built from inception in August 2011 from one outlet to 24 outlets comprising of restaurants, lounges and suya and grill spots, and a learning facility, BH Academy, as at today. He jointly owns the majority shares of the company with his wife and sister.
“Bukka Hut is not a one-man business as there are two other shareholders/directors, but they are not involved in the daily management of the business.
“Rasheed and the late Olaolu Martins were co-owners of Nigerian International Securities Lid (NISL), and naturally, Laolu was one of the three people he invited to invest in Bukka Hut when he founded it in 2011; Rasheed resigned from NISL as a director in 2016 to focus solely on building Bukka Hut while Olaolu remained the MD/CEO of NISL and its related businesses,” the statement explained.
Mr Martins was reported to have died from suicide, but fresh information revealed that he slumped at Lenox Mall after a cardiac arrest and was taken to a hospital in Lekki, where he passed on.
Usman Laments Nigeria, Saudi Arabia Trade Volume of $5m
By Aduragbemi Omiyale
The president of the newly-establishment Nigeria-Saudi Arabia Chamber of Commerce, Industry, Mines and Agriculture, Mr Ibrahim Usman, has lamented the low trade volume between both countries despite their historical relationship.
Mr Usman expressed this frustration when he visited the Minister of Information and Culture, Mr Lai Mohammed, at his office in Abuja.
He said at the moment, the trade volume between Nigeria and Saudi Arabia is about $5 million, promising to deepen the relations between the two countries.
“And whereas many Saudi investors are looking out for profitable investment windows in friendly countries like Nigeria, our businesses have been unable to capitalise on such opportunities due to lack of an organised, reliable, safe and very secure private sector platform like a chamber of commerce,” he said.
Mr Usman said a 60-member inter-ministerial delegation from Saudi Arabia will be in Nigeria next week for the second session of the Nigeria-Saudi Arabia Joint Commission, which will further create opportunities for the chamber to set up trade missions.
On his part, Mr Mohammed praised his guest for his effort to establish the organisation after over 10 years of trial, saying he has proven himself as a man of vision and deep conviction.
“Clearly from your presentation, it’s clear that the major objective is to change the narrative and ensure that the relations between Saudi Arabia and Nigeria should not be seen just from the narrow prism of Hajj and Umrah pilgrimage, but from the prism of two very important nations of the world creating a bridge through better cooperation for the two countries and their citizens,” the Minister said.
Mr Mohammed described the chamber as a clearing house for proposals from business people from the two countries in order to open new vistas for trade opportunities.
He said the absence of such a chamber has led to the decline in the volume of trade and also bred trust deficit between business people from the two countries.
“The absence of this vehicle has led to loss of businesses between the two countries and it has also aggravated the trust deficit between them,” he said.
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