[June 23, 2017] |
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Naspers Limited Today Announced Its Results for the Year To 31 March 2017
Naspers (News - Alert) (JSE:NPN) (LSE:NPSN) today announced its financial results for
the year to 31 March 2017. Revenues, measured on an economic interest
basis (including the proportionate contribution from associates and
joint ventures), increased 19% year on year to US$14.6bn. Excluding
acquisitions, disposals and currency movements, growth was 29%.
Businesses outside South Africa contributed 80% of revenues, compared to
77% a year ago.
Core headline earnings grew 41% to US$1.8bn. "Naspers produced
satisfactory results for the year," said Naspers chair Koos Bekker.
"Tencent continued its growth, while we scaled various ecommerce
businesses. Video entertainment is facing new competition from
international players based in the US."
Foreign currencies affect the group's segments to varying degrees. In
video entertainment, weakened currencies have a large impact on earnings
(given pricing in local currencies, but a high US dollar cost base). In
the internet segment, the effect is lessened by a diverse geographic
spread and a cost base generally denominated in local currencies.
Naspers reports in US dollars, meaning that the local currency financial
performance of businesses is translated to US$. Where pertinent,
performance in local currency terms, excluding the effects of
acquisitions and disposals, is quoted in brackets after the equivalent
International Financial Reporting Standards metrics. Amounts are shown
on an economic-interest basis unless otherwise stated.
Revenue in the internet segment, which now accounts for 73% of group
revenues (67% last year), was up 29% (41%) to US$10.6bn. Trading profits
increased 52% (65%), mainly due to Tencent's excellent results and
increased profitability of the more mature ecommerce assets. "The group
now has 21 profitable ecommerce businesses, delivering US$699m in
revenues and US$229m in trading profits," said CEO Bob van Dijk.
"Classifieds performed well, boosted by Avito and accelerated growth in
our European markets led by Poland, Ukraine, Romania and Portugal. Our
B2C, travel and payments businesses all generated strong revenue growth
and were further strengthened by additional investments to drive scale."
Naspers continued to optimise its portfolio during the year.The group
acquired Citrus Pay in the Indian online-payments market and merged its
Indian online travel platform, ibibo, with Nasdaq-listed MakeMyTrip. The
US operations of mobile app-only classifieds platform letgo were merged
with Wallapop and results to date are encouraging. In January 2017, the
group disposed of Allegro and Ceneo in Poland, generating net proceeds
of US$3.2bn. The group also expanded its footprint in the online food
delivery segment, whilst Naspers Ventures made a number of investments
in earlier-stage technology companies.
Last year tough economic conditions led to significant subscriber churn
in the video- entertainment segment. However, 2017 saw some return to
growth with the group adding 935,000 direct-to-home (DTH) homes to bring
the subscriber base to 11,9 million households. The digital terrestrial
television (DTT) business added a total of 597,000 homes. A value
strategy, which focused on bouquet restructuring, better customer
retention and cost reduction, is improving the business for the long
term.
At a macro level, continued currency weakness (the segment bills in
local currencies) resulted in revenues declining marginally to US$3.4bn
(but increasing 7% if the currency impact is excluded). Content costs
increased due to competition. These factors resulted in a trading profit
of US$287m, a decline of 53% (32%) year on year. The group is responding
by removing or renegotiating non-essential content. Intensifying
international competition from global players such as Netflix, Amazon,
Apple (News - Alert) and Google is foreseen.
Although substantial growth of 14% (16%) was recorded in the ecommerce
and digital segments of our media businesses, overall revenues declined
marginally to US$588m. Besides ongoing challenges from structural
industry changes, the segment also faced harsh macroeconomic conditions.
The group's share of equity-accounted results was US$1.8bn and their
contribution to core headline earnings increased 50% year on year. The
combination of higher development spend (up 22% (13%) on a consolidated
basis to US$861m) and a lower profit contribution from the
video-entertainment business resulted in consolidated free cash outflow
of US$125m.
"In the year ahead we will keep scaling the ecommerce businesses to
drive profitability and cash generation. In our more mature businesses,
such as media and video entertainment, the focus will be on managing
macroeconomic and sectoral headwinds through cost containment," said
CFO, Basil Sgourdos. "We will continue to drive innovation and
transformation of existing businesses, while investing to fuel the next
wave of growth," he added.
The complete results are available on the Naspers website at http://www.naspers.com.
IMPORTANT INFORMATION
This media release contains forward-looking statements as defined in the
United States Private Securities Litigation Reform Act of 1995. Words
such as "believe", "anticipate", "intend", "seek", "will", "plan",
"could", "may", "endeavour" and similar expressions are intended to
identify such forward-looking statements, but are not the exclusive
means of identifying such statements. While these forward-looking
statements represent our judgements and future expectations, a number of
risks, uncertainties and other important factors could cause actual
developments and results to differ materially from our expectations.
These include numerous factors that could adversely affect our
businesses and financial performance. We are not under any obligation
(and expressly disclaim any such obligation) to update or alter our
forward-looking statements whether as a result of new information,
future events or otherwise. Investors are cautioned not to place undue
reliance on any forward-looking statements contained herein.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170623005220/en/
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