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Capital Markets

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Banks

Financial system more vulnerable after Trump victory, says BoE

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Currencies

China stock market unfazed by falling renminbi

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Financial

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Categorized | Financial

Sales in Rocket Internet’s portfolio companies rise 30%


Posted on November 30, 2016

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”.

Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed.

Rocket said the adjusted margin for earnings before interest, tax, depreciation and amortisation improved from minus 34.4 per cent in 2015 to minus 17.5 per cent this year. The company’s share price rose nearly 2 per cent to €18.20 in morning trading.

One of the leading lights of the thriving Berlin tech scene, Rocket Internet has built up a stable of ecommerce companies active in areas from food delivery to fashion and home furnishings. It has stakes in HelloFresh, a Berlin-based group that provides boxes of fresh food to subscribers to cook at home, as well as furniture retailers Home 24 and Westwing and ecommerce start-up Global Fashion Group.

But its shares have slumped since its flotation in 2014 amid doubts about whether any of the companies it invests in will ever make a profit, and questions over the way it values its stakes in the start-ups.

Oliver Samwer, co-founder, said Rocket was “continuing to see improvement in profitability” in selected companies in its portfolio, though he acknowledged a fall in revenues and earnings in the third quarter, due to traditionally weak trading in July and August.

Mr Samwer reiterated a pledge that at least three of Rocket’s companies would turn profitable by the end of 2017.

Rocket also reported a consolidated loss for the first nine months of the year of €642m compared with a loss of €59.5m in 2015. That reflected an earlier reduction in the valuation of Global Fashion Group, one of its ecommerce companies, by two-thirds to €1bn following a funding round earlier this year.

It said it continued to be “very well funded”, with €1.6bn in available cash at Rocket and €1.1bn at its portfolio companies as of the end of October.

Mark O’Donnell, an analyst at JPMorgan, said Rocket’s nine-month revenues were more than “5 per cent better than we expected”.

He said HelloFresh had shown the “biggest positive surprise in terms of profitability”, with a loss of €66m — better than JPMorgan’s estimate of €79m.

But the €77m loss at Jumia, an online retailer active in Nigeria, came in larger than Mr O’Donnell’s forecast of €50m.