Johannesburg - Naspers Ltd., Africa’s largest media company, said first-half profit fell 25 percent while a plan to increase its investment will hurt earnings and cash flow in the full year.
Net income declined to 3.1 billion rand ($310 million) in the six months through September from 4.15 billion rand a year earlier, the Cape Town-based company said in a statement today.
Revenue rose 28 percent to 28.8 billion rand.
“We expect development spend to exceed 7 billion rand for the full financial year,” Naspers said.
“As this investment is largely made through the income statement, it will have a dampening effect on both earnings and cash flows in the second half of the current financial year and, cumulatively, for the year as a whole.”
Naspers, which owns stakes in Russian social networking and gaming site Mail.ru Group Ltd. and Shenzhen-based Tencent Holdings Ltd., is expanding its Internet business across the world and increasing its pay-TV subscriber base in Africa.
The company, which invested 4.3 billion rand last year, said it’s seeking new ventures as consumers shift from computers to smartphones.
The media company had a 1.1 billion rand impairment charge mainly due to some fashion businesses in its e-commerce division, according to the statement.
Subscribers to the group’s pay-TV service in Africa increased by 560,000 to 7.3 million across 48 countries, the company said.
Internet Businesses
Sales from Naspers’s Internet unit rose 76 percent to 24.9 billion rand, while revenue from its e-commerce segment almost doubled to 7.9 billion rand.
“Naspers now earns the majority of its revenue, including associates, offshore instead of in South Africa, and from the Internet businesses instead of pay television,” it said.
Chief Financial Officer Steve Pacak will retire on June 30, 2014, and will be replaced by Basil Sgourdos, who is now the CFO of Naspers unit MIH Holdings.
Pacak will remain as a non- executive board member.
Naspers has gained 79 percent this year, making it the best-performing stock on the FTSE/JSE Africa Top 40 Index.
Multichoice, a broadcast unit of Naspers, has held talks with Vodacom Group Ltd. about providing access to its television content, a person familiar with the matter said earlier this month. - Bloomberg News