Naspers looks to online retail and video for growth
by Chris Spillane
2015-11-30 05:56:14.0
NASPERS plans to use the proceeds of a proposed $2.5bn capital raising to invest in online retail and video opportunities as Africa’s biggest company pursues further growth in emerging markets.
"E-commerce is still very much an area of focus for us and I think that the majority of our investment will actually go into e-commerce models," CEO Bob van Dijk said at the weekend. "We also like connected video."
Naspers said on Friday it was considering the fundraising to "invest in attractive growth opportunities" and to pay down debt related to the increase of its stake in Avito, Russia’s largest classifieds ads site.
The company has expanded through acquisitions in emerging market start-ups across the world, and in August started Showmax, a video-on-demand service that will be expanded to four continents by next year.
Mr van Dijk said he would be talking to major investors about the capital raising "in the next few days". The company has appointed Citigroup and Morgan Stanley to advise on the transaction.
Naspers is the owner of DStv, sub-Saharan Africa’s biggest pay-TV service, which had been struggling this year due to weaker currencies and economic growth in some markets, Mr van Dijk said.
The company had raised prices in response, prompting some customers to cancel their subscriptions, he said. Naspers also cut back on less popular content and reduced costs.
Sales from the video-entertainment segment, formerly referred to as pay television, increased 12% to R22.6bn in the six months to September, while the number of television customers was little changed at 10.2-million.
"We’ll have to navigate the economic challenges in Africa over the next years," said chief financial officer Basil Sgourdos.
Naspers overall revenue for the half-year to September rose 10% to R37.8bn, driven by growth in the e-commerce segment. The internet segment — which includes e-commerce and classifieds businesses — accounts for 64% of the group’s total revenues.
Overall core headline earnings increased 45% to R8.8bn, lifted by Tencent and the video-entertainment business. The group’s share of the results of equity-accounted investments, mainly Tencent and Mail.ru, was R8bn for the period. Naspers’s e-commerce segment grew revenue 27% to R15.3bn.
"The classifieds business made progress ... The e-tail, marketplace and travel businesses are widening the gap in operating metrics relative to competitors," said Mr van Dijk.
Media24, which publishes newspapers such as Beeld, and a string of magazines, reported a modest trading profit of R202m. Revenues were marginally up at R4bn. But it continues to face pressures in its traditional offline print and media business.
"The impact of sectoral declines in its traditional print and media revenues is being offset by growth in its online and e-commerce initiatives," Naspers said. Media24 spent R142m on its online initiatives.
Businesses outside SA now contribute 75% of revenues, up from 71% a year ago.
Naspers shares fell 3.7% to R2,143.15 on Friday, paring the year’s gain to 41%, and valuing the company at R901bn.
Bloomberg, with Thabiso Mochiko
Picture: THINKSTOCK
NASPERS plans to use the proceeds of a proposed $2.5bn capital raising to invest in online retail and video opportunities as Africa’s biggest company pursues further growth in emerging markets.
"E-commerce is still very much an area of focus for us and I think that the majority of our investment will actually go into e-commerce models," CEO Bob van Dijk said at the weekend. "We also like connected video."
Naspers said on Friday it was considering the fundraising to "invest in attractive growth opportunities" and to pay down debt related to the increase of its stake in Avito, Russia’s largest classifieds ads site.
The company has expanded through acquisitions in emerging market start-ups across the world, and in August started Showmax, a video-on-demand service that will be expanded to four continents by next year.
Mr van Dijk said he would be talking to major investors about the capital raising "in the next few days". The company has appointed Citigroup and Morgan Stanley to advise on the transaction.
Naspers is the owner of DStv, sub-Saharan Africa’s biggest pay-TV service, which had been struggling this year due to weaker currencies and economic growth in some markets, Mr van Dijk said.
The company had raised prices in response, prompting some customers to cancel their subscriptions, he said. Naspers also cut back on less popular content and reduced costs.
Sales from the video-entertainment segment, formerly referred to as pay television, increased 12% to R22.6bn in the six months to September, while the number of television customers was little changed at 10.2-million.
"We’ll have to navigate the economic challenges in Africa over the next years," said chief financial officer Basil Sgourdos.
Naspers overall revenue for the half-year to September rose 10% to R37.8bn, driven by growth in the e-commerce segment. The internet segment — which includes e-commerce and classifieds businesses — accounts for 64% of the group’s total revenues.
Overall core headline earnings increased 45% to R8.8bn, lifted by Tencent and the video-entertainment business. The group’s share of the results of equity-accounted investments, mainly Tencent and Mail.ru, was R8bn for the period. Naspers’s e-commerce segment grew revenue 27% to R15.3bn.
"The classifieds business made progress ... The e-tail, marketplace and travel businesses are widening the gap in operating metrics relative to competitors," said Mr van Dijk.
Media24, which publishes newspapers such as Beeld, and a string of magazines, reported a modest trading profit of R202m. Revenues were marginally up at R4bn. But it continues to face pressures in its traditional offline print and media business.
"The impact of sectoral declines in its traditional print and media revenues is being offset by growth in its online and e-commerce initiatives," Naspers said. Media24 spent R142m on its online initiatives.
Businesses outside SA now contribute 75% of revenues, up from 71% a year ago.
Naspers shares fell 3.7% to R2,143.15 on Friday, paring the year’s gain to 41%, and valuing the company at R901bn.
Bloomberg, with Thabiso Mochiko
