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.
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.”
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.”
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.
It was 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.
