Naspers shares nose dive on profit warning

A logo sits on display inside the headquarters of Napsters Ltd., at the Media24 Ltd. office complex in Cape Town, South Africa, on Thursday, May 7, 2015. South Africa lacks a coherent economic policy and government departments are failing to work together, said Koos Bekker, billionaire and chairman of Naspers Ltd., Africa’s biggest company. Photographer: Halden Krog/Bloomberg

Shares of the largest listed company on the JSE, Naspers, slid more than 5 percent after the investor warned shareholders that it expects a decrease in earnings. For the six-month period ended 30 September 2022, Naspers’s core headline earnings per share from continuing operations will fall year on year by between 52.3% and 59.7%, the group said in a trading statement.

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Usually business report on headline earnings per share (HEPS), but Naspers believe that core headline earnings is a “more appropriate indicator of operating performance”. That opinion makes sense once you see that Naspers’ HEPS will decline by more than 100%, pushing the group into a loss on this financial reporting measure. Core HEPS declined due to “investment in adjacent opportunities in e-commerce and lower contributions from associates and Tencent”, Naspers said.

“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 group has taken action to meet these challenges and will take further action to continue delivering long-term value to our shareholders,” it said.

“Headline earnings are also impacted by our increased investment in earlier-stage e-commerce extensions of autos, convenience and credit,” Naspers said. “For the six months … our e-commerce businesses maintained strong top-line growth momentum with growth coming from the core of our businesses and from our expansion into adjacent opportunities within each core segment.”