Naspers sees e-commerce boom, rapid AI deployment

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 24 Jun 2024
It has been a standout year for the group, says Naspers.
It has been a standout year for the group, says Naspers.

South African internet giant Naspers’s e-commerce business is profitable for the first time. This emerged when the JSE-listed company today announced full-year financial results for the year ended 31 March.

It has been a standout year for the group, it says in a statement. Naspers simplified its group structure, delivered improvements across all core performance metrics and achieved e-commerce profitability six months ahead of target, it adds.

Operating businesses have performed well, accelerating profitable growth, while the open-ended buyback programme continues to deliver value for shareholders, says the company.

It notes the rapid deployment of artificial intelligence (AI)-led technologies across the Naspers ecosystem is generating results and will set the next frontier of value creation for the group.

According to the firm, Naspers has a strong balance sheet, and is well-positioned to generate improved returns through smart and disciplined capital allocation, driving value for stakeholders.

On 17 May, the board announced the appointment of Fabricio Bloisi, former iFood CEO, as Prosus and Naspers Group CEO, effective from 1 July. Ervin Tu, interim group CEO, will become group president and chief investment officer.

The company saw accelerated top-line growth of 18%, with e-commerce consolidated revenue of $6.3 billion.

It achieved consolidated e-commerce profitability ahead of target, with a $460 million improvement in trading profit to $24 million. Free cash flow increased $836 million from $477 million, a two times improvement year-on-year.

The $32 billion of value was created by the ongoing buyback programme since launch, delivering 9% net asset value per share accretion.

Fabricio Bloisi, incoming group CEO of Prosus and Naspers.
Fabricio Bloisi, incoming group CEO of Prosus and Naspers.

Tightening up for profit

It notes that group structure was simplified through the removal of the cross-holding agreement between Prosus and Naspers.

Tu, interim group CEO of Prosus and Naspers, comments: “We have made substantial progress this year in delivering against our strategy. Our e-commerce portfolio is profitable for the first time and our ongoing buyback has created significant shareholder value.

“We also reorganised the group, bringing us closer to our businesses so that we can enhance their performance further. AI continues to be the highest priority, and our in-house AI expertise, combined with our implementation of AI in practice across our entire portfolio, are distinct competitive advantages.

“AI is instrumental to our efforts in building and investing behind the next wave of technology leaders.”

Bloisi, incoming group CEO of Prosus and Naspers, says: “These results illustrate the amazing progress we’ve made, as well as our future potential. Prosus operates in some of the world’s most dynamic markets and through our technology ecosystem, we can make a real difference to the lives of our more than two billion customers.

“In June, I’ve learnt more about our business and I’m even more excited about the potential to further leverage our ecosystem and keep improving our results. I’m confident in our ability to innovate, collaborate and lead within existing and new sectors, and to grow our businesses’ profitability. I begin on 1 July 2024 and am excited about the enormous potential that I see to generate long-term value for all our stakeholders.”

Basil Sgourdos, group CFO of Prosus and Naspers, comments: “Following a year of strong execution, our e-commerce portfolio is profitable for the first time, well ahead of target. What’s more, our peer-leading growth accelerated, and profitable growth is set to continue. Core headline earnings almost doubled, and our strong e-commerce results and performance at Tencent have driven a threefold increase in free cash flow.

“Our strong and flexible balance sheet, active portfolio management and disciplined capital allocation put us in strong position to deliver against our long-term strategy.”

On food delivery, Naspers says iFood grew well and significantly improved profitability. It delivered top line growth, with gross merchandise value (GMV) up 20%, orders up 18% and revenue increasing 22%.

It notes that iFood’s core restaurant business almost tripled trading profit to $260 million, with a 24% trading margin.

Overall, iFood’s trading profit increased to $96 million, up 249%, supported by optimised marketing spend and increased cost control.

Delivery Hero grew group GMV by 6% for the year ended 31 December 2023, with revenue up 16%, boosting profitability to adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of €254 million.

Swiggy grew gross order value by 26%, as operating metrics improved, and adjusted EBITDA improved to a loss of $261 million.

On classifieds, Naspers says OLX Group delivered a strong performance, with accelerated growth and expanding margins.

It adds that classifieds consolidated revenue grew 27%, driven by a strong performance in OLX Europe, notably in the motors category, and a recovery in OLX Ukraine.

Trading profit more than tripled to $172 million, with trading profit margin increasing 13 percentage points, to 24%.

The JSE-listed firm explains that classifieds performance was driven by streamlining of operations, more effective marketing spend and strategic optimisation of technology hubs.

For payments and fintech, Naspers notes PayU saw strong growth within the core payments service provider (PSP) business and improved overall profitability.

Consolidated revenue for payments and fintech grew 38% to $1.1 billion, driven by growth in core PSP operations in India and at GPO.

Core PSP grew revenue by 41%, total payment volume increased by 25% and delivered a trading profit of $19 million. It witnessed standout performance at Iyzico, PayU’s Turkish PSP business, with revenue up 119% in nominal terms and a trading profit of $17 million.

Overall, payments and fintech consolidated trading loss improved by 81% to $31 million, with a six percentage point improvement in trading profit margin.

Phuthi Mahanyele-Dabengwa, South Africa CEO of Naspers.
Phuthi Mahanyele-Dabengwa, South Africa CEO of Naspers.

Platform economy

Phuthi Mahanyele-Dabengwa, South Africa CEO of Naspers, comments: “Our businesses in South Africa continue to innovate and explore new opportunities, despite the challenging economic conditions affecting consumers.

“This demonstrates our commitment to develop a deep understanding of consumer needs and develop solutions that improve everyday life. We are proud of the performance of these businesses, most notably, which has surpassed 10 000 active sellers on its marketplace.

“We believe the platform economy is a catalyst for economic growth, innovation and job creation in South Africa.”

Takealot Group increased GMV by 13% and revenue by 8%, while cutting trading losses by 36%, overcoming tough market conditions, says Naspers.

Mr D and Superbalist saw GMV increases of 16% and 7% respectively, capitalising on expanded product ranges and customer engagement, says the firm.

AutoTrader reported an 11% rise in user traffic, with platform growth of 97% since 2019, highlighting a surge in online vehicle shopping.

Property24 solidified its position as a market leader, while also acquiring a stake in Grace Nineteen, a Black-owned property technology providing tenant solutions.

Media24 plans to re-assess several of its major print titles, advancing its existing shift towards digital platforms.