Naspers warns of earnings drop

Internet giant Naspers says it expects headline earnings per share and earnings per share to decrease significantly for the six months ended September 2019.

Earnings per share in the current period is expected to be reduced significantly as the prior period’s earnings per share included the gain of US$1.6 billion recognised on disposal of the group’s interest in Flipkart Limited in September 2018, which is non-recurring in September 2019.

Earnings per share in the current period included a gain of approximately $600 million recognised on disposal of the group’s interest in MakeMyTrip Limited.

In addition, fair-value gains on investments held by Tencent (classified as at fair value through profit and loss) of approximately $400 million is expected to be substantially less than the gains of $1.4 billion recognised in the prior period, resulting in headline earnings per share decreasing considerably, it said.

The company warned that earning per share could decline by as much as 37.7%, while headline earnings per share could decrease by up to 52.6%.

Core headline earnings per share from continuing operations for the six months ended 30 September 2019 is expected to increase by between 27 and 38 cents per share (between 7.6% and 10.7%). The gains on disposals of investments and fair-value losses have been excluded from core headline earnings, Naspers pointed out.

During the 2019 financial year Naspers said it distributed its interest in its video-entertainment business, MultiChoice Group. Following the distribution, the previous results of the video-entertainment segment were presented as results from discontinued operations. The prior period income statement has been restated to distinguish between continuing and discontinued operations.

On 11 September 2019, the group listed its international internet assets on Euronext Amsterdam. This listing created the largest listed consumer internet company in Europe, Prosus, comprising the group’s internet interests outside of South Africa.

Prosus also has a secondary, inward listing on the JSE in South Africa. Prosus is 73.84% owned by Naspers.

Shares in Naspers climbed in excess of 3% in afternoon trade on the JSE., having declined markedly in recent weeks.

Read: MultiChoice reports strong growth and promises more local content

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Naspers warns of earnings drop