SA’s Naspers Profits Boosted by Tencent, E-commerce

Ecommerce growth was fuelled by strong performances across all segments as they continue to scale.

Naspers future cape town
Naspers future cape town (Photo Credit: timthumb)

Africa’s Biggest Tech Firm Naspers closed its 2017 year with a bang on Wednesday, notching $1.5 billion (R20.5 billion) in core headline earnings, reflecting a 65% rise in the six months to end-September 2017, reflecting a 65% rise from the same period in 2016.

Revenues in the Naspers’ internet division, which now accounts for 77% of group revenues, were up 42% to $6.9bn.

The company said trading profits climbed 47%, boosted by Tencent and declining losses in several ecommerce units.

“Ecommerce growth was fuelled by strong performances across all segments as they continue to scale. Classifieds gained further traction across the portfolio and, excluding the additional investment in letgo, the business turned profitable during the reporting period,” said CEO Bob van Dijk.

“Over the past six months we also strengthened our presence in online food delivery with significant investments in Delivery Hero, plus Swiggy in India.”

Naspers said revenues rose 33% year on year to $9.0bn. Businesses outside South Africa contributed 82% of revenues, up from 80% a year ago.

The Internet firm, which owns stakes in companies in China, Brazil, Russia, US, and Europe, said the video-entertainment business recorded only modest subscriber growth, closing the period at 12.2 million households.

The company said the video-entertainment business reported revenues of $1.8bn, up 8% (7%) on the prior year, and a 4% increase in trading profit to $234m.

It added that the South African DStv business continued to deliver healthy profits and cashflows, despite a weakening economic backdrop, and is seeing good early traction from combining its Showmax offering with DStv Now.

“In sub-Saharan Africa, the business continues to face macroeconomic challenges and weak currencies, but assuming no further substantial currency weakness, as well as continued momentum in subscriber growth and ongoing cost controls, the group will be on track to return to profitability in the coming years,” Naspers informed investors on Wednesday.

It added that it had a strong balance sheet and has a net debt of US$140m reflecting gearing of only 1%.

“The group will continue to drive scale to bring its ecommerce business to profitability and cash generation,” said CFO Basil Sgourdos.

“We will manage macro challenges in the more mature businesses through tight cost controls and will continue to innovate and reposition our businesses to counter increasing competition by global players. We will also continue to invest in opportunities that may power future growth,” he added.



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