Picture: SUPPLIED
Picture: SUPPLIED

Naspers posted a slower rise in half-year earnings on Friday as Tencent’s profit gains were anchored by a slight decline at the online classifieds business and heavy investment in food delivery.

The Cape Town-based company’s 31% stake in China’s Tencent, one of the world’s largest internet companies, represents the bulk of its value. But Naspers has in recent years built up a portfolio of businesses in classifieds, payments and food delivery, which, along with the Tencent stake, it listed as Prosus on Amsterdam’s Euronext bourse in September.

Core headline earnings per share, Naspers’s preferred profit measure, advanced 8% to $3.80 for the six months to end- September, compared with a 10% rise in the previous year. The company reports results in dollars.

The profitability of Naspers and Prosus, in which it holds a 74% stake, is often difficult to track as the company keeps investing heavily to get businesses to a competitive size.

Food delivery was a prime example of this over the period. While the company more than doubled online food orders and grew revenues by 69%, trading losses in the segment ballooned from $41m to $283m.

Food delivery will remain the largest investment area this year, Naspers said. Through Prosus it has launched a hostile takeover bid for the UK’s Just Eat to accelerate its push into new food delivery markets.

But for the time being, classifieds remains Naspers and Prosus’s largest segment, besides of course the Tencent stake.

“Trading profits in the classifieds business reduced marginally year on year due to our investment in convenient transactions,” Naspers said in a statement accompanying the results.

But the classifieds segment remains profitable in aggregate, CFO Basil Sgourdos said.

“Convenient transactions” is a new model the company is backing in online car sales. It involves holding an inventory of vehicles in markets where buyers and sellers might be apprehensive about meeting each other due to safety concerns, Sgourdos said.

But it was the more established e-commerce businesses and Tencent, thanks to increased profitability, that made the largest contribution, the company said.

Naspers has had an eventful year. First it spun out MultiChoice, which is now listed on the JSE, followed by the creation of Prosus.

“While growing revenues, trading profits and core headline earnings, we took several steps to build a global business with long-term growth,” Naspers chair Koos Bekker said in a statement.

Prosus reported its first set of half-year results simultaneously, posting a 20% increase in revenue to $9.9bn and a 7% rise in trading profit to $1.9bn. Prosus’s core headline earnings per ordinary share grew 6% to $1.05.

Besides the stake in Prosus, Naspers also owns SA’s Takealot.com, Media24 and an investment fund called Naspers Foundry.

Naspers shares, up more than 1.5% in earlier trading, pared gains after the announcement to close 1.2% firmer at R2,233.15.

strydomt@businesslive.co.za