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Rocket Internet narrows losses, boosts sales at key startups

Tuesday, April 25, 2017 - 15:48

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Rocket Internet SE increased sales and shrank losses at some of its biggest startups, bringing the company closer to a target of having three of its main investments break even by the end of this year.

[BERLIN] Rocket Internet SE increased sales and shrank losses at some of its biggest startups, bringing the company closer to a target of having three of its main investments break even by the end of this year.

Food-box startup HelloFresh boosted sales 49 per cent to 158.7 million euros (S$237.5 million) in the fourth quarter. Adjusted losses before interest, tax, depreciation and amortisation narrowed at businesses including HelloFresh, Global Fashion Group and Dafiti, Rocket said Tuesday. Overall, Rocket reported a loss of 741.5 million euros for 2016, weighed down by impairment charges and deconsolidation of subsidiaries.

"In 2016, our selected companies progressed on their path towards profitability, while demonstrating further growth," CEO Oliver Samwer said in a statement.

Investors are betting Berlin-based Rocket can improve its businesses after criticizing the startup incubator's reporting for a lack of transparency and questioning Mr Samwer's ability to turn profits from units that operate in commodity sectors in challenging markets. The CEO has vowed to make three businesses profitable by the end of the year, a target the company reiterated Tuesday.

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One of those could be Delivery Hero, a food delivery startup about 37 per cent owned by Rocket. Delivery Hero said yesterday it is considering an initial public offering after reporting a 79 per cent increase in full-year sales to 297 million euros.

While the current market environment is "very positive", it's up to the startups to decide on potential IPOs, Mr Samwer said on a call with reporters.

Shares of Rocket Internet advanced 1 per cent to 16.51 euros at 9:08am in Frankfurt. They've lost 15 per cent this year through Monday.

Not every startup managed to grow. Sales at African online platform Jumia declined 1.4 per cent to 30 million euros in the fourth quarter as it shifted to a marketplace model. Adjusted loss narrowed to 15.5 million euros from 62.8 million euros.

Rocket expects to start 5 to 8 companies this year after launching and incubating 8 last year in industries including logistics, Mr Samwer said. The company will give more information on its outlook when it reports first-quarter results at the end of next month, CFO Peter Kimpel said on the call.

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