Naspers half year results ended 30 September 2014

Solid progress in ecommerce and pay-TV  

Naspers today announced financial results for the six months to 30 September 2014. 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 ecommerce and internet businesses growing ahead of pay-television and print, 72% of group revenues are now earned offshore.


Core headline earnings grew 24% to R6,1bn, despite expensing R4,4bn in the continued development of the group’s ecommerce and pay-television platforms. “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 etail businesses, internet remained the fastest-growing segment and accounted 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 ecommerce revenues increasing 43% YoY to R12,1bn. This segment reported a trading loss of R2,4bn after incurring development spend of R3,6bn.


The group’s classifieds efforts are focused on about 40 countries globally and after recent brand migrations, the majority of classifieds sites now operate under the OLX banner. Naspers recently strengthened its position in this segment through an agreement with Schibsted to jointly develop select markets in Latin America and South East Asia, subject to EU approval. Competition remains aggressive, but the group has outgrown its competitors on the measures that matter most, particularly in mobile.


In pay-television, solid subscriber growth of 342 000 households drove revenues up 18% to R20,2bn. The business covers 50 countries on the African continent and provides services to over 8,4m homes. Trading profit increased 11% to R5bn, after expensing R642m of investment in DTT and online video initiatives. The personal video recorder (PVR) base expanded to 1,2m subscribers and customers are now renting some 600 000 movies per month on BoxOffice, a service that will soon be expanded into sub-Saharan Africa. Analogue switch-offs, once implemented, should provide future momentum for subscriber growth on the DTT platform.


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.


Naspers’s share of core headline earnings from associates, including Tencent in China and Mail.ru Group in Russia, increased by 43% to R6,4bn. This was mainly due to continued strong performance by Tencent, including benefits from its transaction with JD.com.


“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,” cautioned CFO, Basil Sgourdos. “Our goal remains to develop online classifieds, etail and DTT to deliver future growth and create value over time,” he added.


-  END  -