Rocket Internet confident in profitability of three start-ups

Rocket Internet’s chief executive Oliver Samwer said the company’s target to make three of its start-ups profitable by the end of 2017, first voiced last year, was still on track.

Rocket Internet’s chief executive said the company’s target to make three of its start-ups profitable by the end of 2017 was still on track. Dado Ruvic / Reuters
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Tech incubator Rocket Internet remains confident that three of its start-ups will turn a profit before the end of 2017, after reporting narrowing losses for the first quarter.

Rocket Internet chief executive Oliver Samwer said the company’s target to make three of its start-ups profitable by the end of 2017, first voiced last year, was still on track, speaking on a results conference call yesterday.

The company, which last week announced the sale of a 51 per cent stake in Middle East online fashion retailer Namshi to Emaar Malls, posted a loss of €86 million (Dh352.9m) for the three months to the end of March, compared with a loss of €342m a year earlier.

“We are confident that our sel­ected companies will continue to progress on the path towards profitability throughout the year and we are investing in sustainable growth,” said Mr Samwer.

He declined to comment on speculation that Rocket Internet is preparing to float online food takeaway firm Delivery Hero and meal kit company HelloFresh in the coming months.

Revenue across the firm’s main portfolio companies rose by 28 per cent year-on-year to €617m, thanks to a near doubling of revenue at Delivery Hero and 45 per cent growth at HelloFresh.

Turnover at the firm’s Global Fashion Group division, which includes Namshi, rose by 35 per cent to €265m during the quarter.

Emaar Malls’ acquisition of a 51 per cent stake in Namshi for US$151 million came two months after its unsuccessful bid for Dubai-based e-commerce firm Souq.com, which was eventually acquired by Amazon.

Namshi made its first annual profit last year on revenues of Dh555m, suggesting a multiple of 1.95 times net revenue.

Emaar Malls will help to develop Namshi’s logistics infrastructure and boost its geographical expansion, the Dubai-based retail giant said last week.

Rocket Internet’s annual losses nearly quadrupled in 2016, dragged lower by a higher share of losses in joint venture and associate companies.

Once a rising star of Germany’s tech incubator sector, the company’s share price has suffered in recent months, amid investor doubts about whether its start-ups will achieve profitability.

Fellow investment firm Kinnevik sold a 6.6 per cent stake in Rocket Internet in February, after clashing over the valuation of start-ups in which both companies had invested.

jeverington@thenational.ae

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