Media and internet firm Naspers on Monday (27 June) reported strong revenue growth with profitability in core operations for the year ending March 2022, led by the group’s e-commerce portfolio which delivered revenue growth of 49% to $10.7 billion.
Group trading profit reduced 10% to $5 billion, reflecting investment to expand the market opportunity for each segment and strengthen the customer ecosystems of our businesses.
Core headline earnings were $2.1 billion, a reduction of 40% which reflects ongoing investment in the e-commerce portfolio and a period of slower growth at Tencent as it adapted to regulatory changes in China, Naspers said.
Despite a strong operational performance across the portfolio, the group said that like many technology companies, it faced significant macroeconomic and geopolitical headwinds, leading to highly volatile capital markets in the latter part of the financial year.
The combination of the war in Ukraine, higher inflation and rising interest rates drove up the cost of capital and increased uncertainty. Valuations of global peer group companies in tech and internet sectors declined sharply in recent months as the level of risk appetite reduced significantly.
“These forces drove, for the first time in many years, a decline in the group’s net asset value. The discount to the group’s sum of the parts increased to an unacceptable level.”
To navigate these turbulent times Naspers said it will prioritise capital towards supporting its existing businesses and prudent balance sheet management, sustaining adequate financial liquidity.
The group said it invested $6.2 billion to increase its stakes in existing investments and in new assets where it sees a substantial opportunity for future value creation. “This investment was weighted largely to the first half of the year, in our Food Delivery and Edtech segments.”
The Takealot Group, comprising Takealot.com, Mr D Food, and Superbalist performed well, despite the rebound in offline retail sales, said Naspers. The group grew gross merchandise volume by 34% and revenue by 27%, remaining near breakeven, with a trading loss of $7 million (R110 million).
Superbalist and Mr D Food grew revenues by 43% and 62% respectively, it said.
In November, Naspers said that Takealot grew revenues by 36%, while trading losses decreased to near breakeven with a trading loss of $2 million.
Media24 delivered strong results, underpinned by profitability in every part of its business, said Naspers. Recovery over the full year saw revenue increasing by 12% to $257 million (R4 billion) and a trading profit of $17 million (R269 million).
“This turnaround performance against the prior year’s losses was bolstered mainly by continued strong growth in digital subscribers (27%) and advertising (16%), a robust recovery in print media, and excellent school textbook orders and trade sales,” it said.
Since April 2021, Naspers Foundry has invested nearly R350 million in seven technology companies:
- Mobility technology company WhereIsMyTransport (R45 million);
- Digital insurance advice platform Ctrl (R34 million);
- South Africa’s first fully digital insurance platform, Naked (R120 million);
- Car subscription platform Planet42 (R54 million);
- On-demand earned wage access platform Floatpays (R15 million);
- B2B fresh produce marketplace Nile (R40 million); and
- Financial advisory platform LifeCheq (R40 million).
These seven investments take the Naspers Foundry portfolio to twelve companies with a combined investment of close on R700 million since its launch in 2019.
Looking ahead, Naspers said that its goal is to build an e-commerce portfolio that will deliver sustainable value creation over the long term.
Bob van Dijk, Group CEO, Prosus and Naspers, said: “In FY22, we delivered strong growth and scale across our businesses, positioning them for continued growth. We invested in our segments and strategic M&A over the year, reflecting our belief in the potential of the businesses we are building.
“Looking ahead, we will seek to regularly crystallise the value that we are creating. Today, we have announced an open-ended share repurchase programme that will efficiently unlock value for shareholders and increase NAV per share at scale.”
Prosus said it will begin selling small numbers of ordinary shares in Tencent Holdings held by the group regularly, “and in an orderly manner”, while concurrently purchasing Prosus Shares and Naspers Shares
“It will also rebalance our asset base towards our fast-growing non-Tencent assets, whose value we expect to increase over time, while retaining exposure to Tencent’s significant value creation potential. We will continue to execute our long-term strategy to build valuable consumer internet businesses to deliver sustainable returns over the long term,” said Van Dijk.