Naspers revenue soars on Tencent

Naspers on Tuesday (25 November) reported a 20% rise in profit for the six months ended September 2014, to R34.4 billion, amid continued growth in Tencent.

Naspers’ growth has been closely aligned to Tencent, a Chinese media and entertainment company in which it owns 34%.

Tencent revenues were RMB38.1 billion (R68.3 billion), up 37% year on year.

Naspers said that revenues measured on an economic interest basis, including the proportionate contribution from associates and joint ventures, expanded 30% year on year (YoY).

With the group’s e-commerce and internet businesses growing ahead of pay-television and print, 72% of group revenues are now earned offshore, it said.

Core headline earnings grew 24% to R6.1 billion, despite R4.4 billion in the continued development of the group’s e-commerce and pay-television platforms.

It reported core headline earnings per n ordinary share of 1,528 cents versus 1,248 cents in 2013.

Trading profit declined 4% to R2.98 billion, however the group reported an operating profit of R2.25 billion, from R1.62 billion in 2013.

“Our internet businesses remain the fastest-growing part of the group. Segment revenues were up 44% to R35.8 billion. Within the internet segment, e-commerce grew at 43%, reporting revenues of R12.1 billion,” Naspers said.

A strong performance by Tencent, partially offset by higher development spend in its e-commerce businesses, resulted in a 67% increase in trading profit to R6.5 billion.

“We are pleased with our progress to date,” said Naspers chair Ton Vosloo. “Execution
capacity and operations are strengthening throughout the group and the focus is on
customer satisfaction, engagement and retention.”

Boosted by accelerating revenue growth in many e-tail businesses, Naspers said its internet segment now accounts for 58% of total group revenues.

“We are seeing meaningful increases in organic traffic in our markets as we deliver compelling customer propositions and scale our platforms,” said CEO Bob van Dijk.

Organic growth resulted in Naspers’s e-commerce revenues increasing 43% YoY to R12.1 billion. This segment reported a trading loss of R2.4 billion after incurring development spend of R3.6 billion, it said.

In pay-television, solid subscriber growth of 342,000 households drove revenues up
18% to R20.2 billion.

The business covers 50 countries on the African continent and provides services to over 8,4 million homes.

Naspers said that the print media segment continues to face tough trading conditions and structural changes to the industry.

“Overall revenues grew slightly, but margins contracted further due to accelerated investments in digital solutions and new growth areas to diversify the revenue base,” it said.

Naspers said its share of core headline earnings from associates, including Tencent in China and Mail.ru Group in Russia, increased by 43% to R6.4 billion.

This was mainly due to continued strong performance by Tencent, including benefits from its transaction with JD.com.

Tencent agreed to buy a 15% stake in Chinese e-commerce website JD.com in March.

“The second half of the year is traditionally the most active part of the year for most of our businesses.”

“We expect some pick – up in spend as we capitalise on the holiday season, which could result in lower core headline earnings for that period,” said CFO, Basil Sgourdos.

“Our goal remains to develop on line classifieds, etail and DTT to deliver future growth and create value over time,” he added.

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Naspers revenue soars on Tencent