Naspers reports 39% revenue growth Y-O-Y as businesses outside contribute 82%

South African media giant, Naspers, has reported a 39% revenue growth year on year in its latest financial results for the six months to 30 September 2017. The report also stated that businesses outside South Africa contributed 82% of revenues, up from 80% a year ago.

Core headline earnings grew 65% to US$1.5bn. According to Naspers chair Koos Bekker, “We delivered a strong performance for the first six months of the financial year. Ecommerce accelerated its topline growth, whilst Tencent produced another excellent set of results. Video entertainment performed solidly in South Africa and managed to stabilise losses in sub-Saharan Africa, despite the continued need to navigate weak macroeconomic conditions.”

Revenues in the internet segment, which now accounts for 77% of group revenues, were up 42% (52%) to US$6.9bn. Trading profits increased 47% (61%), boosted by Tencent and declining losses in several ecommerce units. “Ecommerce growth was fuelled by strong performances across all segments as they continue to scale. Classifieds gained further traction across the portfolio and, excluding the additional investment in letgo, the business turned profitable during the reporting period,” said CEO Bob van Dijk. “Over the past six months we also strengthened our presence in online food delivery with significant investments in Delivery Hero, plus Swiggy in India.”

The video-entertainment business recorded only modest subscriber growth, closing the period at 12.2 million households. The segment reported revenues of US$1.8bn, up 8% (7%) on the prior year, and a 4% (3%) increase in trading profit to US$234m. The South African DStv business continued to deliver healthy profits and cashflows, despite a weakening economic backdrop, and is seeing good early traction from combining its Showmax offering with DStv Now. In sub-Saharan Africa, the business continues to face macroeconomic challenges and weak currencies, but assuming no further substantial currency weakness, as well as continued momentum in subscriber growth and ongoing cost controls, the group will be on track to return to profitability in the coming years.

Media24 achieved satisfactory results, with the structural decline in traditional revenue streams offset by significant cost-reductions throughout the business. The growth businesses, notably ecommerce and digital media initiatives, reported strong growth and now represent 8% of total revenue. The segment’s focus on audience migration to digital formats remains.

Equity-accounted investments contributed US$1.7bn to core headline earnings, an improvement of 52% year on year. Consolidated free cash outflow of US$96m was recorded. The balance sheet remains healthy, with net debt of US$140m reflecting gearing of only 1%. “The group will continue to drive scale to bring its ecommerce business to profitability and cash generation,” said CFO Basil Sgourdos. “We will manage macro challenges in the more mature businesses through tight cost controls and will continue to innovate and reposition our businesses to counter increasing competition by global players. We will also continue to invest in opportunities that may power future growth,” he added.