Naspers chief executive Bob van Dijk on Friday said the group had entered financial year 2020 well positioned as a global consumer internet group following the successful listing and unbundling of MultiChoice Group. Photo: Reuters

DURBAN – Global internet group Naspers reported slow earnings growth for the six months to the end of September, with profit falling at its key investment, Tencent, and accelerated investment into new revenue verticals, such as food delivery.

Naspers, which holds a 31 percent stake in Tencent, grew its core headline earnings per share by 8 percent to 380 US cents a share. Core headline earnings from continuing operations also increased by 8 percent to $1.7 billion (R25bn) on the back of improving profitability in Tencent and the more established e-commerce businesses.

However, headline earnings per share, slid to 326c from 624c a year earlier – a 48 percent fall in profit.

Chief executive Bob van Dijk on Friday said the group had entered financial year 2020 well positioned as a global consumer internet group following the successful listing and unbundling of MultiChoice Group. 

“In the first six months, we successfully listed our international internet assets as Prosus on Euronext Amsterdam in September, creating Europe’s largest consumer internet company by asset value and unlocking $10bn in value for our shareholders. The listing of Prosus positions us well for future growth, opening up investor access to our unique portfolio of international internet assets. We delivered solid results and good progress in our core segments, which are growing fast and scaling well,” Van Dijk said.

Group revenue, measured on an economic-interest basis, was $10.2bn, reflecting growth of 11 percent, or 20 percent in local currency, adjusted for acquisitions and disposals. Trading profit increased by 6 percent to $1.9bn. Tencent increased its revenue by 13 percent for the six months to the end of June. 

Naspers received a dividend of $377 million (R5.5bn) from Tencent. 

At the end of the period, the group reported a strong balance sheet with net cash of $5.9bn to pursue growth.

Peter Takaendesa, the head of equities at Mergence Investment Managers, said Naspers’s results came out largely in line with the guidance provided in the trading update published earlier in the week, with core headline earnings per share growing 8 percent. 

“The earnings growth rate is currently much lower than the strong double-digit growth that the market was used to in the past few years due to a slowdown at key investment Tencent, as well as the accelerated investment into new revenue verticals such as food delivery. 

“Revenue trends in core e-commerce investments remain encouraging in strong double-digit growth, and some of the new investments have now turned profitable,” Takaendesa said.

“Tencent is likely to remain the key driver of Naspers shares in the next few years, and we expect Tencent earnings to continue to recover from regulatory headwinds in China, although its overall growth is likely to be a notch lower than the 30 percent plus the market got used to in the past few years,” he said. 

Its subsidiary, Prosus, in which the group owns a 74 percent stake, also reported a 7 percent increase in core headline earnings from continuing operations to $1.7bn.        

Naspers shares closed 1.18 percent higher at R2 233.15 on Friday.

BUSINESS REPORT