Prosus N.V. announced strong revenue growth with profitability in core operations for the year ending 31 March 2022. Building on the prior year’s standout performance, the Group’s ecommerce portfolio delivered revenue growth of 51%1 to US$9.8bn. This growth resulted from strong operational execution and momentum in all ecommerce segments despite the turbulent environment. While the segments demonstrated core profitability, overall trading profit was lower than last year, reflecting investment in scaling the large adjacent opportunities in the segments, which serve significant consumer needs.
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Today, Prosus and Naspers announced the start of an open-ended share repurchase programme of Prosus and Naspers shares. This programme will be funded by regularly selling small numbers of Tencent shares and is designed to efficiently unlock immediate value for shareholders and increase NAV per share over time. The programme will be active as long as the discount to NAV is at elevated levels. Full details are available in the regulatory announcement on the Prosus website.
Looking ahead, the Group will continue disciplined investment into scaling out growth adjacencies to build bigger and more valuable businesses – they have good traction with consumers and high potential to generate sustainable returns over the long term. Reflecting market realities, investment will be balanced with a focus on reducing costs and driving profitability in the core, and setting even higher targets for M&A returns. The Group aims to bring the ecommerce portfolio to profitability in aggregate and to build significant additional value. Investment in existing businesses and in Prosus and Naspers shares is expected to create significant value for shareholders.
Headlines1
- Group revenue up 24% to US$35.6bn; Ecommerce revenue grew 51% to US$9.8bn with profitability in core operations.
- US$6.2bn invested to accelerate growth and scale adjacent opportunities; accordingly, overall Group trading profit reduced by 6% to US$5bn.
- Core Headline Earnings down 20% to US$3.7bn reflecting a lower contribution from Tencent, post the Group’s sale of 2% of its holdings in Tencent, increased investment in growth adjacencies and strategic M&A, and higher finance costs.
- Board and management focused on growing NAV and NAV per share overtime:
- Investing for growth and value creation across the portfolio
- US$6.2bn share repurchase executed during the year
- Announced start of open-ended share repurchase programme.
- Disposal of JD.comshares concluded, raising-piece of approximately US$3.7bn to enhance the Group’s credit profile and liquidity.
- Going forward, the Group will continue to build valuable companies and remains committed to better evidencing, and crystallising, the value of the Group’s ecommerce portfolio.
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Basil Sgourdos, Group CFO, Prosus and Naspers, commented:
“Ecommerce revenues were up 51% and this performance is set against a stand-out performance in the prior year and significant global volatility. The macro-economic and severe geopolitical challenges in the second half of the year have presented significant headwinds. But our operations remain strong, and with improved profitability at the core, we are investing to scale into adjacent opportunities across our segments. We believe that growth from the autos transaction businesses in Classifieds, broader on-demand delivery ecosystem in Food Delivery, credit and digital banking in Payments & Fintech, and new investments in Edtech will create significant value for the Group over time.”
“As part of our strategy to optimise our capital allocation, we purchased US$6.2bn of our own shares, which generated a meaningful enhancement to our NAV per share. We have also been active in the bond markets, raising US$9.3bn at attractive interest rates. The Group has a strong and liquid balance sheet, bolstered by the recent sale of our JD.com stake and we remain intent on maintaining our investment grade rating. Our solid financial footing positions us well for the challenging operating environment and the execution of our strategy.”
Strong and consistent performance in ecommerce
Ecommerce revenues grew 51% to US$9.8bn, with robust growth across all key segments. This performance was led by 93% growth in Classifieds, 77% growth in Food Delivery, 55% growth in Edtech and 45% growth in Payments & Fintech.
Classifieds, as well as core payments, remain profitable, with trading profit of profitable ecommerce businesses increasing 17% to US$493m.
With strong operational execution, good consumer traction, and improving profitability in core operations, the Group increased investment to pursue opportunities for each segment. Extending into complementary adjacencies, areas of enhanced investment included autos transactions, credit and digital banking, and food, convenience and grocery delivery. Ecommerce losses of US$1.1bn reflect this investment. Approximately 65% of this loss is from associates within our investment portfolio and does not have a cash impact on the Group.
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