Naspers has reported a 65% improvement in revenue from its Internet business on the back of robust performances from Tencent, Mail.ru and its e-commerce businesses. The more mature pay-television business, housed in MultiChoice, also delivered impressive numbers, with revenue rising by 20%.
Trading profit, however, lagged in both areas, with the Internet segment reporting an 8% improvement in profit due to increased investments to support future growth and the pay-TV segment climbing by 13% due to greater spend on digital terrestrial television networks in a number of African markets.
Consolidated group revenue for the year was 26% higher at R62,7bn, helped in part by a sharp deterioration in the value of the rand. However, headline earnings fell by 10% to R6bn.
Group growth was fuelled by development spend of R7,7bn — up by 79% on last year — with the money devoted particularly to e-commerce and digital TV projects. “As previously cautioned, this expansionary spend had the effect of limiting core earnings to R8,6bn, approximately the same as last year.”
Naspers says it will continue to invest heavily for organic growth. “We may also acquire new businesses within our fields of focus. Through a combination of attractive markets and appealing customer product offerings such as online classifieds, e-retail and digital terrestrial TV, we have a realistic prospect for growth over the medium term.”
Tencent, the Chinese Internet company that has underpinned the strong performance in Naspers shares in recent years, “performed rather well in a dynamic and highly competitive Chinese market”. Revenue rose by 38%.
At 31 March, Tencent’s QQ instant messaging software had 848m monthly active users. Another product, Qzone, had 644m monthly active users, while Weixin/WeChat had 396m.
Russia’s Mail.ru recorded a 30% improvement in revenue, with net profit climbing by 36% on the back of growth in contextual (as opposed to display) advertising. Online gaming also propelled sales.
Naspers invested heavily in its large portfolio of e-commerce businesses. Revenue here grew by 64% to R20,3bn, but development spend was high, contributing to a trading loss of R5,3bn.
In pay TV, subscriber numbers grew by 1,3m to over 8m homes across sub-Saharan Africa. MultiChoice now offer digital terrestrial TV in 92 cities across eight countries (South Africa is not among them). The company is also expanding its online offerings on smartphones, tablets and PCs.
Not surprisingly, the only segment to disappoint was print media, which experienced another “tough year”. Revenue was flat, with profit margins falling. Trading profit fell by 18% to R606m on revenue of R11,7bn, which was down 2% on the 2013 financial year.
The Naspers board has recommended a dividend of 425c/share be paid, up by 10% from a year ago. — © 2014 NewsCentral Media
