Jumia, the Germany-registered e-commerce company trading in Nigeria and other African countries, is still far from the woods as latest projections show the company may take longer to break even. The earliest foreseeable date is 2026, according to analysts.

Jumia had faced a backlash of litigation including class actions following its listing on the NewYork Stock Exchange, NYSE. The rash of litigation, according to industry watchers, contributed strongly to the slump in fortunes of the e-commerce company. The litigations projected Jumia in bad light and eroded consumer and investor trust. Jumia is reportedly paying out $5 million in settlement in accordance with industry and court procedures.

Trading under the name, Jumia Technologies AG (NYSE: JMIA), the e-commerce company which shut down operations in a couple of African countries was also badly hit by the Covid-19 pandemic leading to loss of Eur 37.6 million (N17 billion) in the second quarter of 2020.

Earnings before interests, taxes, depreciation and amortization, EBITDA, losses per order also reportedly decreased materially Year on year. Losses remained high both in absolute terms and as a percentage of gross merchandise volume, GMV.

Touted to break even soon after listing in the NYSE, market watchers working on the current indicators have predicted a break-even not earlier than 2026. Covid-19 and trust deficit were strongly cited as reasons for the dipping fortunes.

With GMV down 19% YoY (-13% on a LfL basis) to EUR228 million and adjusted EBITDA loss of EUR33mn ($30m) equivalent to 14.4% of GMV, there appears little to cheer for Jumia and far little expectation from its investors.

The slow return to full commercial activities by corporates and individuals have further put a dent to signs of early recovery for the e-commerce company.

Covid-19 lockdown has ensured that GMV growth remained weak and Jumia does not expect anything except continued softness throughout the rest of this year, making hope of early leap to breaking even dimmer.

Major highlights of the report include:

GMV growth remained weak at -13% YoY in 2Q on a LfL basis and -19% on a non-adjusted basis (from -21% in 1Q and -3% in 4Q). Active customers were up 40% YoY, however order frequency dropped materially (orders up only 8%), while check was down 21% due to mix shift towards lower-ticket items. The largest GMV decline was observed in the phones categories, while the fastest-growing categories were beauty & care, FMCG and digital services. Jumia said it expects continued GMV softness throughout 2020.

JumiaPay TPV was up 106% YoY to EUR54mn in 2Q, with on-platform penetration having reached 23.5% of GMV, while the number of transactions increased by 36% YoY to 2.4mn. 36% of orders placed on Jumia in 2Q20 were paid for using JumiaPay (vs 28% in 2Q19).

Monetisation continued to improve with marketplace revenue and overall gross profit both up 38% in 2Q, reflecting the mix shift towards higher take-rate categories. Fulfilment costs fell by 2% YoY in 2Q (vs 8% growth in the number of orders) thanks to operational improvements as well as lower share of cross-border and smaller cities’ packages. As a result, gross profit after fulfilment increased to EUR6.0mn / 2.6% of GMV (vs 1.3% of GMV in 1Q).

Selling, General and Administrative, SG&A, cost-cutting continued, with sales & advertising expenses down by 51% YoY and G&A costs excl. one-off down 2%. As a result, adjusted EBITDA loss was EUR33mn in 2Q20 (2Q19: EUR44mn), and was EUR29mn excluding the net settlement expense related to full resolution of all action lawsuits against Jumia.

From the results, Jumia recorded a significant improvement in working capital, owing to longer payables cycle and improved accounts receivables management. As a result, cash utilization was only EUR17mn in 2Q vs EBITDA loss of over EUR30mn. If sustained, the improvements are likely to mean the current cash position (EUR174mn vs EUR191mn as of end-1Q and c.EUR400mn post-IPO) should be sufficient for longer than was previously expected.