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
Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.
In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.
The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.
During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Dipo Olowookere
The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.
This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.
Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.
At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.
Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.
The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.
As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.
By Adedapo Adesanya
The Naira recorded a loss of 82 Kobo or 0.06 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 26, exchanging at N1,380.93/$1, in contrast to the previous day’s rate of N1,380.11/$1.
Equally, the domestic currency further weakened against the Pound Sterling in the official FX market yesterday by N6.06 to settle at N1,824.90/£1 versus the preceding session’s N1,818.84/£1, and lost N10.74 on the Euro to sell at N1,577 .58/€1 versus N1,566.84/€1.
At the GTBank forex counter, the Naira depreciated against the greenback during the session by N4 to close at N1,387/$1, in contrast to Thursday’s value of N1,383/$1, and at the parallel market, it was unchanged at N1,395/$1.
Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the Central Bank of Nigeria (CBN), as it allows demand and supply to move the market.
Also, a stronger greenback has generally put significant pressure on emerging-market currencies.
Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with First Abu Dhabi Bank PJSC, the largest lender in the United Arab Emirates (UAE).
The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.
If the proceeds are brought into the country through the official FX market, the transaction will increase the currency reserves or Dollar liquidity.
At the cryptocurrency market, Solana (SOL) grew by 2.2 per cent to $71.92, Cardano (ADA) gained 1.1 per cent to trade at $0.1474, Ripple (XRP) also appreciated by 1.1 per cent to $1.05, Dogecoin (DOGE) expanded by 0.9 per cent to $0.0755, and Ethereum (ETH) improved by 0.4 per cent to $1,578.84.
On the flip side, TRON (TRX) slid 0.6 per cent to $0.3203, Binance Coin (BNB) slumped by 0.3 per cent to $564.33, and Bitcoin fell by 0.2 per cent to $60,219.37, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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