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- Global internet group Naspers said its headline earnings for the year to end-March may be up to about 82% lower.
- This is an improvement from its half-year fall, and the stable is currently in the midst of paring back its investment spend as part of a focus on profits.
- But while cashflow has improved "meaningfully", the group says it has seen pressure on investees amid higher global interest rates and tougher conditions.
- For more financial news, go to the News24 Business front page.
Shares in global internet group Naspers fell almost 2% on Wednesday morning after the group warned its headline earnings per share would fall by as much as 82% in the year to end-March. This, however, is an improvement from about a 93% fall in its first half.
A lower contribution from Tencent, which was hit by Covid-19 lockdowns in China, hit the Naspers stable for a large part of the year, though Tencent has since reported earnings growth as it benefits from that country's relaxation of restrictions. The Naspers stable is in the midst of a share buyback fuelled by sales of its lucrative Tencent stake.
Naspers owns a majority stake in its subsidiary Prosus, which almost completely accounts for its earnings. Prosus is the consumer internet arm of Naspers, housing its stake in Tencent, as well as its investments in online classifieds, food delivery, payments and fintech, and education technology. Investees include iFood in Brazil, PayU in India and Codecademy.
READ | Naspers claims success with share buyback, while Prosus profit deadline pleases analysts
In SA, Naspers owns internet and ecommerce companies including Takealot, Mr D Food, Superbalist, Autotrader, Property24 and Media24. Naspers is valued at about R1.3 trillion on the JSE, while Amsterdam-listed Prosus, with a secondary listing on the JSE, is valued at R2.7 trillion.
Prosus has said the first half of its 2023 year would mark the peak of its investment spending.
On Wednesday, the group said that cash flow from operations in its full year is "expected to improve meaningfully" from last year due to efforts to improve profits. Prosus has committed to achieving profitability from its ecommerce businesses during the first half of 2025 year.
However, there were also higher write-downs of its investments because of high interest rates and tougher market conditions. Core headline earnings, which the company says best reflects its underlying performance, are expected to fall about 26% to 33%, and had almost halved in its first six months.
The group's stake in Tencent has fallen from 29% to 26%, and Prosus said this created approximately $29 billion in shareholder value (about R540 billion currently) which helped narrow its discount – its market value relative to its underlying assets - by 17 percentage points. The group was trading at about a 55% discount at the end of its 2022 year.
The group's headline earnings from continuing operations are expected to fare slightly better, and during the year the company sold its Russian classifieds business Avito, receiving proceeds in October. The company has also said it's looking to sell its OLX Autos business, with that process ongoing.
READ | Prosus looks to ditch OLX Autos business as second-hand car market slows
Shares in Naspers were trading about 1.7% lower on Wednesday morning but have gained about 79% in the past year. Shares in Prosus were down about 1.5% and have gained more than two-thirds over the past year.
News24 is in the Naspers-owned Media24 stable.
