Rocket Internet narrows quarterly losses at portfolio start-ups

Sales of Rocket Internet grew by an average of 34% at selected start-ups in first quarter


Shares of Rocket have declined about 21% this year. They rose 2.4% to €22.29 on Monday.
 Photo: Reuters
Shares of Rocket have declined about 21% this year. They rose 2.4% to €22.29 on Monday. Photo: Reuters

Berlin: Rocket Internet SE shrank losses at several of its holdings, a relief for the biggest European startup factory as it seeks to convince shareholders its investments in the likes of Delivery Hero and Global Fashion Group will pay off.

Sales grew by an average of 34% at selected start-ups in the first quarter while the companies reduced their adjusted losses by 23% on average compared with a year earlier, the company said on Tuesday in a statement.

“Selected portfolio companies have significantly improved in the first three months of the year and are well progressing on their path to profitability,” chief executive officer Oliver Samwer said. “We are convinced that these companies will continue their positive development in 2016.”

Rocket, which helps guide a stable of investments such as HelloFresh, Westwing and Delivery Hero, is under pressure to prove it is backing the right start-ups as many of them had witnessed a little progress with reducing losses last year. Many of its companies were still in the growth phase and needed investments in 2015, Samwer said earlier this year, vowing to show “significant” improvements in profitability this year and next.

While adjusted earnings before interest, taxes, depreciation and amortization improved at a number of start-ups, HelloFresh, a recipe-kit based subscription food service, posted a wider loss even as sales rose by 211%.

Shares of Rocket have declined about 21% this year. They rose 2.4% to €22.29 on Monday.

Rocket-backed delivery service Foodpanda already has countries where it’s breaking even, and furniture seller Westwing and fashion retailer Lamoda will continue to move toward profitability, Samwer said in April after reporting a full-year loss of €197.8 million. Rocket expects its African business, which got investments from Goldman Sachs Group Inc. and Axa SA, to become “very successful” in the coming years, chief financial officer Peter Kimpel told investors.

Investment AB Kinnevik, the second-biggest shareholder in Rocket, will evaluate its stake once the holdings will mature in two to three years, CEO Lorenzo Grabau told Swedish daily Dagens Nyheter earlier this month. The Samwers still are the biggest shareholder in Rocket.

United Internet AG, Rocket’s third-biggest shareholder that owns 8.3% of the company, said earlier this month it still believes that Rocket has “significant” market opportunities. The German Internet and telecoms company said it won’t divest its stake. Bloomberg

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