BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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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.