Naspers Ltd, Africa’s largest media company, said first-half profit fell 25 per cent while a plan to increase its investment will hurt earnings and cash flow in the full year.
Net income declined to R3.1-billion in the six months through September from R4.15-billion a year earlier, the Cape Town-based company said in a statement on Tuesday. Revenue rose 28 per cent to R28.8-billion.
"We expect development spend to exceed R7-billion 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 and Shenzhen-based Tencent Holdings, is expanding its Internet business across the world and increasing its pay-TV subscriber base in Africa. The company, which invested R4.3-billion last year, said it’s seeking new ventures as consumers shift from computers to smartphones. The media company had a R1.1-billion 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.
Sales from Naspers’s Internet unit rose 76 per cent to R24.9-billion, while revenue from its e-commerce segment almost doubled to R7.9-billion. "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 per cent 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 about providing access to its television content, a person familiar with the matter said earlier this month. – Bloomberg