Prosus’ trading profit falls in first half of 2023 financial year despite rise in revenue

Stock image of the Prosus internet group. Picture: Ian Landsberg

Stock image of the Prosus internet group. Picture: Ian Landsberg

Published Nov 23, 2022


Netherlands-based internet and e-commerce group Prosus NV’s trading profit fell sharply in the first half of its 2023 financial year, despite an increase in revenue.

The Amsterdam and JSE listed subsidiary of Naspers said yesterday that trading profit for the six months to September 30 fell by 37% to $1.4 billion, reflecting the impact of e-commerce extension investments and currency headwinds in emerging markets.

Prosus’ share price however gained 2.64% to R1021.82 on the JSE in early Wednesday trade.

Revenue in the first half climbed 9% to $16.5 billion, driven mainly by a 41% increase in e-commerce revenue, which benefited from a robust operating performance across all core segments.

Core headline earnings were down 60% to $897 million, the results showed. Revenue was boosted by meaningful contributions from all main operating segments, classified as food delivery, payments, fintech and edtech.

Merger and acquisition investment of $230 million was lower than in previous periods due to the high cost of capital, and after capital was preserved and organic growth prioritised in high-potential units in the e-commerce portfolio.

“Our businesses are scaling and the focus is to accelerate their path to aggregate profitability. While addressing cost, we still invested in growth, and consolidated trading losses increased by $209 million to $449 million, driven by earlier-stage e-commerce extensions,” CEO Bob van Dijk said in the results announcement.

“The period under review represented the peak of investment. Moving into the second half of the year, we expect trading losses to reduce as we realise the benefits and cost reductions take hold.”

Van Dijk said expectations and valuations had come under pressure as consumers adapted to the new realities of higher inflation and interest rates.

“We are reducing our cost base sharply to meet these challenges and will take further action to deliver long-term value to our shareholders,” he said.

The free cash outflow was $132 million, a year-on-year decrease of $129 million. This was due to reduced profitability in the e-commerce portfolio. In addition, working capital requirements rose due to increased investment in credit businesses. The investment in China-based internet group Tencent contributed to cash flow via a dividend of $565 million.