Naspers profit 'held back' by weak local currencies

Cape Town - Naspers [JSE:NPN], Africa’s largest company by market value, said fiscal full-year profit growth will be held back by depressed sub-Saharan economies and weaker local currencies.

Best known for its early investment in Chinese e-commerce site Tencent Holdings, Naspers is absorbing the impact of rising costs so the continent’s struggling consumers will keep paying for Netflix-like service ShowMax and its cable TV offerings, chief executive officer Bob van Dijk said in an interview.

Sub-Saharan Africa makes up a fifth of sales at the Cape Town-based company.

“We are trying to help our customers in the region by not raising our prices, even though we buy our content from places like Hollywood and pay for it in dollars," Van Dijk said.

Since June 2014, oil prices are down about 60%.

Revenue

“This is devastating for economies like Nigeria, a country that also saw its currency weaken significantly,” said Van Dijk.

Two years into the job, Van Dijk is expanding Naspers’ online streaming service across Africa, the least-connected continent with a significant population, to counter Netflix’s domination plans. But consumers in Africa and Russia, another targeted market, have lost ground as commodity prices slumped.

Naspers, which owns Africa’s biggest pay TV business, spent $1.2bn to gain control of Russian Craigslist copy Avito in 2015. Van Dijk plans to expand the online classifieds business in Africa and is considering Nigeria as the next country to introduce mobile online payments system PayU, he said.

Analysts project Naspers’ revenue will rise 13% to R82.3bn ($5.4bn) in the year ending March 31, the average of 14 estimates compiled by Bloomberg.

Profit, excluding some items, is forecast to more than double to R16.8bn.

The Tencent stake is worth more than $60bn today, more than Naspers’ own market capitalisation, indicating that investors affix no value to Naspers’ other businesses.

Van Dijk is still investing, making bets where he sees opportunities even if the market disagrees.

“We try not to second guess the market,” said Van Dijk, a former head of eBay’s German operations. “In time the market will start to understand these other businesses and see the value. We want to stay in business in the region and see a lot of potential and opportunities in Sub Saharan Africa still.”

*Fin24 is a division of Media24, a subsidiary of Naspers