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Home Industries Tech News

Jumia plans to spin off logistics and payment unit in a bid to become profitable

William UkpebyWilliam Ukpe
2 years ago
in Tech News
Q3 ’19: Jumia grows revenue by 52%

Jumia co-CEO Sacha Poignonnec, left, applauds as Jumia Nigeria CEO Juliet Anammah, center, rings a ceremonial bell when the company's stock begins trading, on the floor of the New York Stock Exchange, Friday, April 12, 2019. Jumia is recognized as the first African tech startup company to be listed on the NYSE. (AP Photo/Richard Drew)

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Jumia Technologies announced a plan to spin off its logistic unit in Africa in a bid to boost revenues, which have been helped by the pandemic as e-commerce activities rose during the period.

This was disclosed by Co-Chief Executive Officer, Sacha Poignonnec, who said its time Jumia lays the foundation for future growth, in a Bloomberg report.

READ: Jumia is optimistic of COVID-19 boost, despite poor Q1 2020 earnings report

He added that the unit to be focused on is responsible for goods transport in 11 Africa countries it has operations in, including Nigeria and also the payments unit of the company, which enables Jumia to settle transactions.

The co-CEO said the company is exploring spinning off both units.

“We created something that does not really exist in Africa, which is an end-to-end logistics partner on the continent. We have built it from the get-go so that one day we are in the position to carve it out if we want to.”

READ: What bad stocks have in common with bitter relationships 

Poignonnec added that Jumia in recent years has opened up its logistic units, enabling 3rd party suppliers in negotiating shipping and transport costs.

“The focus is on reducing losses and controlling costs, and deciding where to allocate our resources. No one questions the relevance of e-commerce as a business — and the opportunity in Africa is massive. Seven years ago, people were questioning how we are even going to do this, now the only question remains on profitability.”

READ: Nigeria loses N3.5 trillion to post harvest loss annually – Farmcrowdy boss

He also added that as Jumia exits operations in some African markets, it still sees opportunities in some, especially Ethiopia, as being African focused enables the company and shareholders to have an exposure to the entire continent, citing institutional investors like MTN and MasterCard working with Jumia across the continent.

Jumia’s stock price has increased by more than 500% in the past 12 months.

READ: Nigeria Fintech startup, CredPal raises $1.5million funding

What you should know 

Nairametrics reported in August that Jumia recorded a loss after tax of N17 billion in the second quarter of 2020, despite the rampaging effect of COVID-19.

Nairametrics also reported last month that apart from the rebounding stock price, the company is recording positives in almost all performance indices in the year 2020.

In the Q3 financial results released on 10 November 2020, Jumia’s gross profit was €23.2 million ($27.3 million), a YoY increase of 22 percent.

Jumia’s gross profit after fulfilment expense reached €6.6 million, compared to a loss of €1.7 million in the third quarter of 2019, marking the first time that the Jumia Group scored a positive in its gross profit after fulfilment and advertising expenses.

READ: Food and agriculture market in Africa to rise above $1 trillion by 2030 – AfDB President

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Tags: Business NewsJumia TechnologiesSacha Poignonnec

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