Naspers trading profits up

Naspers reports a strong six months to 30 September and says operating performance, mainly driven by continued performance from the ecommerce businesses and Tencent, is encouraging.

Naspers says that as part of regular portfolio reviews, four notable transactions were concluded. In Poland the agreed sale of the Allegro business for US$3.25bn realises a solid return on investment.

The merger of the ibibo platform with MakeMyTrip creates a leading business in the Indian travel segment.

Naspers said: "The acquisition of Citrus Pay drives consolidation in the Indian online payments space, while the consolidation with Wallapop gives mobile-only classifieds platform, letgo, increased scale in the United States (US). The video-entertainment segment experienced weak African currencies. However, the team delivered a pleasing return to subscriber growth, with subscribers closing at 11m."

On a consolidated basis, revenue declined marginally by 1% (up 11%), largely due to the effects of currency translation.

Disposals concluded in the first six months of the year, notably the Czech ecommerce units, Netretail and Heureka, also reduced year-on-year revenue growth.

Consolidated development spend increased 38% (42%) year on year to US$387m as new growth initiatives were pursued. This includes letgo, predominantly operating in the US, building the hotel offering in the Indian travel business and our subscription video-on-demand unit, ShowMax, launched in August 2015.

Development spend on these new initiatives totalled US$188m. Across the rest of the portfolio, development spend declined by US$40m, as the ecommerce businesses, particularly classifieds, increased scale and profitability.

Trading profit increased 21% (42%) to US$1.5bn, boosted by the group's share of Tencent's trading profit. Trading profit was further boosted by a contraction in losses of etail assets and increased profitability in Allegro.

A lower opening subscriber base in sub-Saharan Africa, coupled with the effects of foreign exchange, saw video-entertainment trading profits decline some 43% (14%) to US$226m. IFRS operating profit declined from a positive US$67m to a negative US$30m, mainly due to currency weakness in the video-entertainment segment and increased development spend to pursue growth initiatives.