Investment in e-commerce has negatively affected the media giant's balance sheet but the company says its strategy is sound.
Naspers, Africa’s largest company by market value, said full-year profit rose at the slowest pace in at least six years after the media company’s strategy of investing in TV, Internet and e-commerce businesses weighed on earnings.
Adjusted net income increased by 1% to R8.6-billion in the 12 months through March, the Cape Town-based company said in a statement on Monday. The company also announced a R1.6 billion impairment charge after some e- commerce units including Markafoni of Turkey missed targets.
“While aggressively investing for the long term limits short-term earnings and cash flows, we believe this strategy to be sound,” the company said. “Our established businesses should continue to be in the aggregate cash flow positive, profitable and growing.”
Naspers, which owns stakes in Hong Kong-based Tencent Holdings and Russian Internet company Mail.ru Group, is reporting its first earnings under chief executive Bob Van Dijk, who replaced billionaire Koos Bekker on April 1. The company plans to spend more than R7-billion in expanding digital-TV access in Africa and grow the e-commerce unit.
Naspers shares declined as much as 3.8%, the most on an intraday basis since April 30, and traded 3.3% lower at R1227.95 as of 9.21am in Johannesburg. The stock has gained 12% this year, giving it a market value of R513-billion. That compares with an 11% increase on the FTSE/JSE Africa All-Share Index. The stock more than doubled in 2013.
Subscribers to the group’s pay-television service increased by 1.3-million to more than 8-million homes, the company said. Revenue rose 26% to R62.7-billion rand as Internet sales advanced 65%.
E-commerce businesses, including FashionDays, Brandsclub and Markafoni, missed targets, the company said. Naspers also wrote down its investment in Brazilian publisher Abril SA. – Bloomberg