Naspers warns of coronavirus impact on earnings

Media and internet group Naspers warns that it anticipates its earnings will decline substantially following continued investments in key parts of its business, while the evolving Covid-19 pandemic is expected to have an impact on future trading.

Core headline earnings per share (HEPS) for the full year ended March are likely to drop by between 10% – 16%, with HEPS anticipated to fall between 46.9% – 40.9%.

“We ended the financial year facing into the global Covid-19 pandemic, with many of our markets entering lockdown in the last two weeks of March 2020,” it pointed out.

Naspers said that during the year ended March 2020, all key e-commerce segments made good progress against financial and strategic objectives.

“Classifieds again grew considerably faster than many of its peers and increased profits. Payments and Fintech segments have now reached profitability at their core and continue to grow profits, while also investing to drive future growth.”

“Food Delivery was a key investment area during the year as we seek to grow the market and our position in it by investing in technology and building out our first-party delivery capabilities, city and restaurant reach.

“Initial results are highly encouraging as, to date, this investment has driven significant order and revenue growth in our Food Delivery operations,” the group said.

Naspers warned, however, that while all segments will continue to benefit from secular growth trends, the global pandemic has negatively impacted some operations.

“That said, it is important to note that the fundamentals of our businesses remain very strong and we believe that we are well positioned to weather this unprecedented storm.

“We have sufficient liquidity to provide our businesses with the appropriate level of funding as well as invest in external opportunities that may present themselves during this period,” it said.

Naspers said that growth in core headline earnings is expected to come from continued ‘healthy growth’ from Tencent, and its established e-commerce business.

However, it will be offset by the additional investment to drive strong growth in the food delivery business, while the introduction of minority shareholders, through the listing of Prosus and subsequent sale of shares, will also weigh on earnings.

This is expected to reduce the attributable core earnings of Naspers shareholders for the year ended 31 March 2020, by approximately $465 million, Naspers said.

In addition, the impact of the MultiChoice, its pay TV business, listing during the 2019 financial year also distorted the growth in earnings.