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Coupang raises guidance, cuts losses after fee hike

SEOUL: Coupang Inc, the South Korean e-commerce giant backed by SoftBank Group Corp, raised its 2022 profit forecast and cut losses as higher monthly membership fees and improved operational efficiency helped boost the profitability.

The company now expects to make a profit before interest, tax, depreciation and amortization, compared to an earlier projection of a loss of US$400 million (RM1.88 billion).

Its second-quarter operating loss narrowed to $67 million (RM316 million) from a loss of $514.9 million (RM2.5 billion) a year earlier. Total net income increased by 12% to US$5 billion (RM24 billion) during the period, while the number of active customers increased by 5%.

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

Founder and CEO Bom Kim said the company’s expansion is helping profitability.

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

“But as we have pointed out, the rate of improvement will not be constant. As a result, efforts will materialize unevenly.

Kim mentioned that there were short-term disruptions due to rising inflation as well as fuel costs. In the long term, the company will try to hit targets of 7% to 10%, he said.

Amazon beat expectations for the June quarter, helped by its cloud computing division as it faces inflationary pressures on transportation and commodity costs.

The e-commerce giant is cutting costs by limiting hiring, but it is pursuing acquisitions to develop new growth opportunities. It is increasing spending on entertainment and streaming content and food delivery service as it seeks growth. —Bloomberg