PROSUS NV said yesterday that the valuation of its e-commerce portfolio had doubled to $39 billion (about R555bn) during the year ended in March compared to a year earlier, as the group recorded bumper operating profit and revenues soared.
Prosus, one of the world’s largest consumer stocks, generated group revenues of $28.8bn, 33 percent higher than a year earlier.
Trading profit soared to $5.6bn, 44 percent higher than the prior year on strong returns from its e-commerce business and Chinese software giant, Tencent.
Tencent’s contribution to the group’s trading profit improved 29 percent.
“For the first time, we are confirming an independent valuation of our e-commerce portfolio of $39bn. This is almost double the valuation of a year ago and it has delivered an annual return in excess of 20 percent since 2008,” said the group.
Prosus, which serves 2 billion users globally, generated free cash inflow of $126 million, an improvement on the prior year’s free cash outflow of $338m.
“This was driven by growth in our e-commerce profitability, dividends received from Tencent of $458m from $377m in 2020, and improved working capital management,” said the group.
Core headline earnings rose 39 percent to $4.9bnon improved profitability from our e-commerce units and the growing contribution from Tencent.
Chief executive Bob van Dijk said that the results were the group’s strongest to date, and mirrored how the group was reaping the fruits of adjusting its strategy for an online world.
“Our strategy to reposition the group for an increasingly online world meant we were well prepared for the acceleration of online adoption through the pandemic,” said Van Dijk.
The classified segment, which owns OLX, was the hardest hit by the Covid-19 pandemic after the sudden and strict lockdowns, recorded an 18 percent growth in revenue to $1.3bn, reflecting a strong recovery in the second half.
The e-commerce segment was a star performer after generating a 54 percent growth in revenue to $6.2bn. E-commerce’s growth in revenue had outpaced Tencent’s 28 percent revenue growth, said the group.
Anchor Capital’s chief information officer, Mike Gresty, said operationally, Prosus had posted a solid set of results at an aggregate level.
“While I doubt investors will pay too much attention to the operational trends,” Gresty said, “I think it is worth keeping the progress it is making in mind – it’s a long road obviously, but it looks like a very credible performance to me and it’s hard to believe that if the group can sustain it, investors will not eventually start to recognise this.”
Gresty said trading losses for the e-commerce division declined from $782m to $429m.
“This is all heading in the right direction but what is important is that the group is able to sustain this picture over multiple years if it is going to succeed in convincing investors that it is more than just a proxy for Tencent,” said Gresty.
Prosus invested $7bn since the beginning of the year in the expansion of its ecosystem and to become more relevant to its customers.
Chief financial officer Basil Sgourdos said the expansion planted the seeds of future growth.
Prosus invested in a $5bn share-buy back of Naspers and Prosus stock and post-year end it sold a 2 percent stake in Tencent, decreasing its holding to 28.9 percent.
“The resulting proceeds of $14.6bn create added financial flexibility to invest in new opportunities and sustain strong growth and returns embedded in our e-commerce portfolio,” said Sgourdos.
Prosus rose 1.22 percent on the JSE yesterday to close at R1 429.75.
BUSINESS REPORT