Naspers expects to report a more than 50% drop in earnings for the six months to end-September due to a global economic downturn — characterised by high inflation and interest rates — leading to reduced activity in e-commerce.
On Monday, the group said it expects to report core headline earnings per share of 228c-257c, which is up to 61.7% lower than the previous comparable period.
Core headline earnings is the group’s preferred profitability metric, stripping out certain non-operating items such as share-based payment expenses on transactions where there is no cash cost.
Growth and earnings were negatively affected by the ongoing economic downturn.
“During the period, growth expectations and valuations came under significant pressure as consumers adapted to the realities of higher inflation and interest rates on their daily lives and spending power,” the company said in a note to shareholders.
The group, whose stock is widely held by money managers, pension funds and retail investors, said it had moved to meet these challenges and “will take further action to continue delivering long-term value to our shareholders”.
Other measures such as earnings per share and headlines earnings will also see large falls. The group said this was due to investment in its e-commerce properties, as well as lower contributions from associate companies and its largest investment, Tencent.
This comes as Naspers is reportedly expecting a R100bn payday after Tencent unveiled a plan last week to distribute its stake in Chinese food delivery business Meituan to shareholders.
Tencent has been reducing holdings in portfolio companies to simplify its sprawling structure of investments and to appease Chinese regulators.
In 2021, Tencent cut its stake in China’s second-largest e-commerce business, JD.com, from 17% to about 2%. JD.com stock worth $16.3bn was distributed to shareholders. In June, Prosus sold almost $4bn of JD.com shares, about 4% of the company, saying it did not fit into its overall strategy.
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