Internet properties bump Naspers profit up 23%

Emerging markets media and internet giant Naspers saw its profit jump 23% on the back of seriously strong internet sales.

The Cape Town-based company posted adjusted net income of R8.5-billion rand (US$848-million), through the 12 months leading up to March 2013 and beating out investor estimates.

While the group’s pay TV revenue was still strong — it reported revenue growth of 20% to R30.3-billion, over a million new subscribers and 18% growth in trading profit to R7.6-billion — the real winner was its internet portfolio, despite investing heavily in new properties throughout the year.

Internet revenues grew 80% to R34.6-billion. Due to costs of developing ecommerce products and services, says Naspers, trading profits increased at a slower rate of 44% to R6.2-billion. The company’s share of core earnings from associates, including Tencent in China and Mail.ru Group in Russia, increased by 45% to R7.2-billion. To put that last number in context, it’s only a little below what it made from TV as a whole.

Naspers chair Ton Vosloo also revealed that “a milestone was reached this year when managed revenues from our Internet units exceeded that of pay television”.

Company CEO Koos Bekker is once again bullish about Naspers’ prospects as a major ecommerce player.

“We hope to expand our ecommerce businesses across more emerging markets,” he said. The company’s ecommerce revenues doubled to R11.4-billion, through a combination of organic growth and a few acquisitions. The company says it’s placing particular emphasis on etailing and online classifieds. It cautions however that because it is in the building phase, this segment is presently loss-making and it does not expect profits in the aggregate for several more years.

That makes sense, especially when the company’s print operations (the original basis for its existence), keep under-performing. Media24 for instance reported only marginal top line and profit growth, although it did launch several new initiatives.

The company also says its aware of, and planning for, the significant shift from the personal computer to mobile devices such as smartphones and tablets and that this trend simultaneously disrupts existing business models and creates new opportunities.

According to Naspers financial director Steve Pacak “this strategy will mute both short-term earnings and cash flows”.