Coupang raises forecast, narrows loss post-fee hike

SEOUL: Coupang Inc, the South Korean ecommerce giant backed by Softbank Group Corp, has raised its earnings forecast for 2022 and narrowed its losses, as higher monthly membership fees and improved operational efficiency helped boost profitability.

The company now expects to make a profit before interest, tax, depreciation and amortisation, compared with an earlier projection for a Us$400mil (Rm1.88bil) loss.

Its second-quarter operating loss narrowed to Us$67mil (Rm316mil), compared with a Us$514.9mil (Rm2.5bil) loss a year earlier. Total net revenue rose 12% to Us$5bil (Rm24bil) in the period, while the number of active clients rose 5%.

The Seoul-based company has been trying for years to boost profitability in its core delivery business, most recently raising the monthly fee for its “Rocket Wow” service – similar to Amazon.com Inc’s Prime membership – earlier this year.

Founder and chief executive officer Bom Kim has said the company’s expansion is helping profitability.

“We do expect benefits to continue to come from greater economies of scale, improved operational excellence and the growth of higher margin categories and services,” Kim said on a post-earnings conference call.

“But as we’ve stressed, the rate of improvement will not be consistent. As a result, the efforts will materialise unevenly.”

Kim mentioned there are some disruptions in near term due to higher inflation as well as fuel costs. In the long term, the company will try to achieve targets of 7% to 10%, he said.

Amazon topped expectations for the June quarter, helped by its cloud computing division as it faces inflationary pressures in transportation costs and merchandise.

The ecommerce giant is lowering costs by reining in hiring, but it is pursuing acquisitions to develop new growth opportunities. It is ramping up spending in entertainment and streaming content and on its food delivery service, as it searches for growth.