Jumia foresees growth despite losing $8m in Q1 2024
Jumia, a leading African e-commerce platform, stated that it is beginning to observe early signs of growth, even as the firm records operating losses of $8m in the first quarter of 2024.
An e-copy of the company’s annual report, obtained by News HQ on Wednesday, revealed operating loss was $8m, compared to $28m in the first quarter of 2023, down by 71 per cent year-over-year, and down 79 per cent in constant currency.
The financial results for the three months ended March 31, 2024, showed that the company’s loss before income tax increased by 36 per cent year-over-year and by 12 per cent in constant currency, largely driven by an $11m increase in net foreign exchange losses.
The company attributed this to currency devaluations in Nigeria and Egypt and an increase in finance costs related to Jumia’s treasury and investment portfolio management activities.
Just like in Nigeria, the Egyptian government floated the Egyptian pound and significantly increased interest rates, resulting in higher dollar inflows from foreign investors.
However, the e-commerce giant’s revenue grew to $49m, up 19 per cent year-over-year and 57 per cent in constant currency. While its gross merchandise volume stood at $181m, up 5 per cent year-over-year and 39 per cent in constant currency.
The company said the growth was due to the sales of high-value items like electronics and home furnishings, although it was partially offset by the impact of foreign exchange.
Despite these challenges, Jumia expressed that it was committed to navigating the volatile economic landscape and capitalizing on the long-term growth opportunities in Africa’s e-commerce sector.“Jumia is off to a strong start to the year.
Following a transformational 2023, we continued to execute against our strategic priorities focused on strengthening our core business and improving cash efficiency while establishing a leaner organization primed for growth.“
Our efforts drove a 5 per cent year-over-year and 39 per cent constant-currency improvement in GMV in the quarter, while order growth and AOV also expanded, a clear sign that our strategy is working.
“Disciplined expense management and further streamlining of our logistics network reduced our quarterly cash burn to $19.1m from $22m in the first quarter of 2023,” Jumia noted in the reportAnother notable positive in the report is that JumiaPay transactions reached 2 million, an increase of 52 per cent year-over-year driven by the successful rollout of JumiaPay on delivery in one of Jumia’s largest markets.
Jumia said there were ongoing efforts to streamline the user experience, and the continued rollout of JumiaPay on delivery to increase cashless orders positions JumiaPay as a stronger enabler of the company’s e-commerce platform.
Commenting on the financial result, the Chief Executive Officer of Jumia, Francis Dufay, stated, “Our success is more notable when considered against the challenging macro environment in Africa.
“Significant currency devaluations in some of our largest markets impacted both purchasing power and supply availability, making for a difficult operating environment.“However, our ability to secure sufficient inventory and offer a diversified product assortment at competitive prices continues to keep consumers engaged on our platform.“
Importantly, we are also beginning to see early signs of general stabilisation in select markets, leaving us hopeful that conditions will continue to improve. For example, despite the volatile conditions, we are seeing order growth in Nigeria and Ghana, illustrating Jumia’s value proposition,” Dufay noted
The CEO said he was pleased with the progress to date and remained energised about Jumia’s potential for the future.“
We have proven that, with the right team and the right strategy, growth does not require heavy spending. Rather, a deep understanding and appreciation of the African e-commerce market, along with a targeted growth strategy, leaves us well positioned to drive continued growth in 2024 and beyond,” he remarked.
