Yahoo Finance Prosus Posts First E-Commerce Profit as New CEO Set to Join
(Bloomberg) -- Internet investing giant Prosus NV and its parent Naspers Ltd. swung their e-commerce business into profit for the first time ever as new Chief Executive Officer Fabricio Bloisi prepares to take the reins in July.
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The group’s e-commerce business, which excludes its stake in Tencent Holdings Ltd., reported a full-year trading profit of $38 million for the year ended March 31 as it managed to scale its business after years of investment, according to a statement on Monday. That’s up from a $413 million loss in fiscal 2023 for the unit, which comprises a portfolio of companies ranging from iFood in Brazil to PayU in India.
The results will give momentum to Bloisi, as the group contends with a tough market for internet businesses and the legacy of a complicated business structure that stumped Bloisi’s predecessor, Bob van Dijk.
Cape Town-headquartered Naspers is one of the biggest technology investors globally and listed its internet unit, Prosus, in Amsterdam five years ago — but kept a single CEO across both entities. Apart from big bets in e-commerce, the group holds a 25% stake in China’s Tencent that has ballooned in value, distorting the rest of the business. Van Dijk stepped down last September, shortly after unwinding a complicated cross-shareholding structure between the two companies intended to address this distortion.
Improved efficiencies in core units such as classified advertising, food delivery, payments and fintech — as well as cost cuts that included closing non-performing units — helped the e-commerce unit’s swing to profitability. IFood, the Brazilian online food delivery business run by incoming CEO Bloisi, used artificial intelligence to cut costs by $100 million.
Bloisi talked up the possibilities of the tech in an interview with Bloomberg News.
“My history is adapting new technologies and to move fast to learn what can be done,” he said. “I have billions of customers across the world and a technology that changes everything in AI, the opportunity is 100 times bigger.”
Bloisi will become CEO July 1, taking over from interim head Ervin Tu, who becomes chief investment officer and president.
Prosus Chief Financial Officer Basil Sgourdos said in the same interview the group grew e-commerce revenue at 19% during the year. He compared that with an internal analysis that showed peers growing at more like 7%.
“That is central to the improvement to profitability, and we are deploying AI and will continue to manage our cost well,” Sgourdos said. “Growth, profit and margin expansion are the focus for the year ahead.”
The group has sold down some of its Tencent stake to buy back its own shares, in an attempt to close the trading discount. Bloisi said the group had narrowed the discount from 62% to 36% through the buyback programme. It’ll continue as long as the discount stays elevated, added Tu.
Net income for the year declined 35% to $6.61 billion, exceeding an $6.25 billion estimate from a Bloomberg survey of analysts.
Deal Making
The company currently boasts $14.6 billion in cash, primarily reserved for investments.
Mergers and acquisitions continue to be an important part of how the group thinks about growth, Tu said. “We are looking quite actively, whether that is minority investments or control.”
Shares in Prosus were up 0.56% to €34.75 at 11:40 a.m. in Amsterdam on Monday. Naspers was up 3.72% in Johannesburg.
--With assistance from Thomas Hall and Andre-Pierre Du Plessis.
(Updates with interview comments from CEO, CIO, CFO)
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