Rocket Internet is promising three profitable startups by the end of the year

Lynsey Barber
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Delivery Hero is one of Rocket Internet's most well-known startups (Source: Delivery Hero)

German startup factory Rocket Internet has improved the profitability of its portfolio of companies which include Delivery Hero and HelloFresh.

Shares dipped more than four per cent at the market open, but later pared that back, remaining largely flat at €21.15 by mid-morning.

The figures

Revenue across the group's main business grew 28 per cent to €617m in the first quarter and losses were reduced by €20m. Earnings before interest, tax, depreciation and amortisation were down 14.7 per cent compared to 22.6 per cent in the same quarter last year.

Its Global Fashion Group revenues grew by 35 per cent to €265m and at Delivery Hero Group it nearly doubled to €121m.

The company said it expects three of its startups to become profitable by the end of the year but did not say which ones.

Why it's interesting

Rocket Internet was built on recreating the ideas of successful Silicon Valley e-commerce startups for the European market, IPOing in 2014 to a frosty reception.

Shares have remained down on their IPO price as investors remain uncertain over the companies ability to produce profitable startups. Last year it took a large writedown on the valuation of Global Fashion Group.

Delivery Hero is expected to go public, with some reports suggesting it could be this year. However, there was no mention of plans for the food delivery company in today's results.

What Rocket Internet said

"In the first quarter of 2017, our selected companies demonstrated further growth and significant improvements in profitability in line with our expectations. 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 chief executive Oliver Samwer.

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