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Emerging markets internet and media giant Naspers has announced revenues of R23-billion (US$2.6-billion) for the six months leading up to 30 September.
That represents a 22% increase over the previous six month period and is in no small part down the company’s ecommerce and emerging markets online investments. In fact, the internet sector is where it has seen the fastest growth.
Ecommerce has seen the biggest gains, growing 61% to R4-billion. Of that growth 27% was organic. Naspers does however note that its focus on “building scale and expanding
ecommerce platforms across the value chain” has trimmed trading profits by one-billion rand and increased the trading loss in the sector.
“The group continues to grow organically, with an increasing focus on ecommerce,” Naspers chairman Ton Vosloo said. “In addition, we have invested R4.5-billion (US$453-million) year to date [sic] in acquiring new businesses in this area”
Naspers CEO Koos Bekker underlined just how valuable ecommerce is to the company “During the next six months we’ll keep growing our e-commerce operations across emerging markets,” he said. “We intend to step up the gas and as a result development spend will accelerate in the second half of the year”.
Its emerging markets investments continued to pay dividends too. Its share of core earnings from associates, including Tencent in China, Mail.ru Group (through which it has an indirect stake in Facebook) in Russia and Abril in Brazil, increased by 46% to R3.1-billion (US$339-million).
The best-performing of these overseas investments was undoubtedly Tencent, which has seen massive growth in its social properties with instant messaging service WeChat expanding to other markets and emerging as a serious competitor to Whatsapp. It’s also begun investing in ecommerce properties and is looking to expand into other emerging markets.
While its online business is booming, things don’t look nearly as good for Naspers’ print division, which has operations in Brazil and South Africa. The performance of the print businesses in these countries, it says, were “strained by the challenging economic climate” and combined delivered revenue growth of five percent, while trading profits were broadly flat.
Naspers financial director Steve Pacak cautions that margins will likely be down in the near future, owing to the its buying spree earlier this year. The company, he says, is more interested in playing the long game: “With development spend ramping up and a changing business mix, future margins will trend down. The plan is however to increase our absolute profits and returns over time.”