Naspers announces improved revenue on the back of strong e-commerce investments

Cape Town – Naspers announced that its core headline earnings grew by 72% to R33.6bn ($2.5bn) as the company released its financial results for the year to March 31, 2018, on Friday afternoon.

Revenues, measured on an economic interest basis, increased by 38% year-on-year to R270bn ($20.1bn).

The group said it strengthened its position in online food delivery services by investing a combined R18.8bn ($1.4bn) in Delivery Hero and Swiggy.

The company – which owns Media24 and Fin24 – also said its businesses outside South Africa contributed 84% of revenues, compared to 80% a year ago.

E-commerce 

In recent years, Naspers has benefited greatly from strong investments in e-commerce businesses around the world, such as China’s Tencent and India’s Flipkart.

The company also hopes to dominate e-fashion retail in South Africa, with the news of Spree and Superbalist merging.

During a recent investor day seminar, Naspers CEO Bob Van Dijk said the company had a strong appetite to hold on to these investments.

In a statement, Naspers said its revenue in the internet segment was up by 50%, compared to 51% in 2017, to R213bn ($15.9bn).

The statement said the company’s trading profits increased by 50% compared to 56% in 2017, fuelled by e-commerce and Tencent’s strong results.

Naspers chair Koos Bekker said in statement that the e-commerce businesses, particularly those in the classifieds sub-sector, each performed well and played a central role in Naspers’ strong financial performance.

"We made good progress this year. Financial performance was strong. Growth in both revenue and trading profit accelerated. We benefited from scale effects in e-commerce and a positive contribution from Tencent.

"Video entertainment’s results were steady," he added.

The internet segment of Naspers' business now accounts for 79% of group revenues, compared to 73% last year. Van Dijk said Naspers would hold onto Tencent for some time, as investment in the asset had served the company well.

"If you have been a long-standing shareholder of Naspers, you have seen a good return on your investment. I hope you will agree with me. It is true that a good chunk of that return has been driven by our excellent investment in Tencent," said Van Dijk.

Van Dijk said it was a welcome development that the classifieds business of Naspers turned profitable. Naspers CFO Basil Sgourdos said classifieds, business-to-consumer, payments and food delivery contributed to an acceleration in e-commerce revenue growth of 25%.

"Increased scale trimmed the e-commerce segment's trading losses by 8% to R9bn ($673m) and resulted in a considerable improvement in trading margins. Classifieds (excluding Letgo in the United States) turned profitable and cash generative during the year," said Sgourdos.

Sgurdos said the contribution from Naspers’ profitable e-commerce businesses matched that of the video entertainment segment for the first time.

* Fin24 is part of Media24, a subsidiary of Naspers.