S.Africa’s Naspers says profit doubles, e-commerce portfolio nears breakeven

By Nqobile Dludla and Toby Sterling

JOHANNESBURG/AMSTERDAM (Reuters) -South Africa’s Naspers reported on Wednesday a jump of 112% in half-year profit, boosted by improved performance of its e-commerce businesses and China’s Tencent, adding that its e-commerce portfolio was now close to breakeven.

“After years of investment and growth, our businesses are now at scale and demonstrate improving profitability,” said interim CEO Ervin Tu, adding that the company expects these investments to become profitable in the current financial year ending March 31, 2024, or six months sooner than expected.

The South African technology investor said core headline earnings per share, a key indicator of operating performance, rose to 454 U.S. cents for the six months ended Sept. 30, 2023, more than double a restated 214 cents posted a year earlier.

Naspers controls Amsterdam-listed Prosus and holds its international investments there.

These cover food delivery companies iFood of Brazil, Delivery Hero and India’s Swiggy, online marketplaces such as OLX, educational software firms such as SkillSoft and Stack Overflow, and payments companies such as India-focused PayU.

Naspers reported an e-commerce trading loss of $38 million, shrinking 85% from a loss of $270 million.

Revenue from continuing operations grew 14% to $3 billion, with the biggest contributors being classifieds, food delivery, and payments and fintech, it said.

Prosus also holds a massive stake in Chinese software and gaming giant Tencent, which it sold down to 25% from 26.2% over the past six months, to fund a rolling share buyback program.

Naspers and Prosus say the buybacks benefit shareholders because Prosus is worth 30% less than the value of the Tencent stake, or $98 billion at current prices.

Prosus took a $340-million impairment charge on the valuation of Stack Overflow, a knowledge-sharing website used by programmers that it bought for $1.8 billion in 2021.

While the site’s business has been hurt by the swift rise of Chat GPT as an alternative tool for programmers, Tu said Prosus was integrating artificial intelligence tools into Stack Overflow and viewed generative AI as an opportunity.

“We have made three investments into AI companies so far, and expect more to come,” Tu added.

(Reporting by Nqobile Dludla; Editing by Tom Hogue and Clarence Fernandez)