Naspers reports 23% jump in FY group revenue

South African multinational consumer internet company Naspers has reported a remarkable 23% increase in group revenue for the financial year. Group Chief Financial Officer, Basil Sgourdos, joined CNBC Africa to discuss the exceptional financial performance, which he referred to as the strongest in the company's history. Sgourdos highlighted the significant growth in the e-commerce sector, with revenues soaring by an impressive 54% year on year, representing a 21% acceleration from the previous year. This rapid expansion in e-commerce surpassed the growth seen in other sectors, such as the 28% increase in the online classifieds business. The company's e-commerce assets have doubled in value over the past year, now independently valued at $39 billion compared to $20 billion just twelve months ago. Sgourdos also emphasized the profitability of a significant portion of the e-commerce portfolio, with 60% of revenues stemming from profit-generating businesses. These profitable businesses are not only experiencing rapid growth, with a 39% increase year on year, but also delivering substantial profits of $443 million. Furthermore, Naspers is actively exploring new avenues for value creation, including ventures into credit and payment services in India, expansion of their food delivery business to offer convenience and grocery items, as well as enhancing online classified services to provide end-to-end solutions including payment processing and product vetting. The company's focus on investing in tech assets over the past five years has led to the creation of a new tech segment within the organization. Naspers recently announced the acquisition of Stack Overflow for $1.8 billion and Good Abbot for $267 million, bolstering their portfolio with rapidly growing businesses that are expected to contribute significantly to profits while offering new value propositions to consumers. Addressing concerns about operating costs totaling $1.1 billion, primarily attributed to higher employee expenses, Sgourdos reaffirmed the company's commitment to retaining and rewarding talented employees who are instrumental in driving growth and business success. The considerable increase in operating costs reflects the long-term incentives provided to employees, tied to the growth and appreciation of the e-commerce portfolio. As long as value creation continues, employees will share in the company's success. Regarding the share swap deal aimed at unlocking shareholder value, Sgourdos explained the necessity of reducing the company's size on the Johannesburg Stock Exchange (JSC) to address current market inefficiencies. The proposed transaction seeks to bridge the gap in the market value of Naspers' shares on the JSC compared to their actual ownership stake. By streamlining the company's dual-listing structure, Naspers aims to eliminate the existing discount associated with their JSC shares, ultimately enhancing shareholder value. Despite initial reservations from some shareholders, Sgourdos expressed confidence in the overwhelming support for the transaction based on extensive engagement and communication efforts to elucidate the benefits and rationale behind the move. With a clear vision of consolidating the company's ownership structure and optimizing shareholder returns, Naspers remains committed to delivering value to its shareholders through strategic initiatives and continuous engagement.