Naspers revenue bolstered by Tencent

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Naspers. (Duncan Alfreds, Fin24)

Johannesburg – Naspers [JSE:NPN] revenues increased 33% year-on-year to about $9bn (R123.4bn) with 82% of revenue stemming from international operations, according to the company’s financial results for the six months ending September 30.

The results were announced on Wednesday. 

The groups’s core headline earnings grew 65% to $1.5bn, with a massive contribution from Naspers’ stake in Chinese internet company Tencent.

Businesses from outside South Africa contributed 82% of the group’s revenues, up from 80% a year ago.

“Revenues in the internet segment, which now accounts for 77% of the company’s group revenues, were up 42% to $6.9bn. Trading profits increased 47%, boosted by Tencent and declining losses in several e-commerce units,” Naspers said in a statement.

“We delivered a strong performance for the first six months of the financial year,” said Naspers chair Koos Bekker in a statement.

“E-commerce 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.” 

The group’s video-entertainment business recorded modest subscriber growth, closing the period at 12.2 million households. The segment reported revenues of $1.8bn, up 8% on the year before, and a 4% increase in trading profit to $234m. 

“The South African DStv business, meanwhile, 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,” the company said.

“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,” the company added. 

Naspers CEO Bob van Dijk said e-commerce growth was fuelled by strong performances across all segments. “Classifieds gained further traction across the portfolio and, excluding the additional investment in letgo, the business turned profitable during the reported period,” he said.  

“Over the past six months we also strengthened our presence in online food delivery with significant investments in Delivery Hero, plus Swiggy in India.” 

Naspers said that its South African media arm Media24 achieved “satisfactory results, with the structural decline in traditional revenue streams offset by significant cost-reductions throughout the business”.

“The growth businesses, notably e-commerce 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,” the company said in a statement. 

After Naspers released interim results mid-afternoon, its share price gained 0.77% to trade at R3 809 per share.   

“While the results at face value appear strong, taking a deeper look presents a mixed outcome with Tencent continuing to do the heavy lifting. MultiChoice SA remains positive, but was affected by currency fluctuations and weaker trading as competitors enter the market,” said Martin Harris of EasyEquities on Wednesday afternoon.

*Fin24’s parent company, Media24 is owned by Naspers.

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