Rocket Internet falls to loss but portfolio value grows

Rocket Internet, the German start-up incubator which focuses on ventures in emerging markets, has published annual results that show revenues at its most-established companies grew by an average of 82 per cent last year.

However, most of the investments are still losing money, as is the overall group.

Rocket's net income swung from €174.2m in 2013 to a €20.2m loss last year, but most of the companies it has launched are not fully consolidated into its results as it holds minority stakes in them.

The Berlin-based backer for dozens of ecommerce, online marketplace and financial services start-ups said in a statement that its €1.4bn initial public offering last year and a series of pre-IPO capital increases caused extraordinary expenses leading to the net loss.

Shares in Rocket were down 2 per cent to €45.01 on Tuesday afternoon.

Rocket adapts business models that other companies have pioneered, dispatching teams to create replicas of these businesses in emerging markets. The value of its portfolio has increased by €2bn to €4.6bn between the IPO and the end of April this year, Rocket said.

Rocket said that losses at 11 of its most established companies were declining as a proportion of revenues.

On average, the earnings of those companies before interest, tax depreciation and amortisation (ebitda) amounted to -34 per cent of their revenue. That figure represented an improvement over last year, when the same measure, known as ebitda margin, was -56 per cent

A number of Rocket companies grew rapidly in sales terms last year. At Lazada, an ecommerce venture in Southeast Asia, gross merchandise volume (GMV) - the value of goods sold - grew by more than 300 per cent to $384m. 

Net revenue at HelloFresh, which delivers pre-measured ingredients for recipes, grew by 380 per cent year-on-year.

Sarah Simon, analyst at Berenberg bank said: "We were positively surprised on [ecommerce ventures such as] Lazada, Linio, Jumia - where margins were moving in the right direction and GMV grew by much more than we had expected."

The analyst said there were "more positive surprises than negative" in Rocket's figures, noting that margins at fashion business Zalora appeared disappointing but this was due to a one-off shift in accounting standards.

Analysts at Goldman Sachs led by Carl Hazeley said in a note to clients: "We view these results as strong, given continued high growth and improving profitability."

 Oliver Samwer, founder and chief executive, said that Rocket had shown a "strong performance".

The group is now strongly focused on takeaway and grocery delivery businesses, which represent 38 per cent of its portfolio by value. Rocket's food businesses dwarfed their competitors in terms of the number of countries in which they operate and the number of orders processed, Mr Samwer said.

"We are the largest global online takeaway group outside China in the world. We are active in 71 countries, number one in 59 countries . . . and the value of the food that's ordered through our platform is over €1bn," he said.

Meanwhile, Delivery Hero, a food-ordering business in which Rocket holds a 40 per cent stake, announced the acquisition of the Turkish food delivery brand Yemeksepeti today, in a transaction valued at $589m.

Yemeksepeti, which is active in Greece and the Middle East as well as Turkey, processes over 3m orders a month and is a profitable business, according to a statement announcing the deal.

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