Prosus records first e-commerce profit after new CEO joins

(Bloomberg) — Online investment giant Prosus NV and its parent company Naspers Ltd. turned their e-commerce business into profit for the first time in history as new CEO Fabricio Bloisi prepares to take the helm in July.

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The group’s e-commerce division, which excludes its stake in Tencent Holdings Ltd., posted a full-year trading profit of $38 million for the year ended March 31 as it managed to scale up its operations after years of investment, according to a statement statement published Monday. That’s up from a $413 million loss in fiscal 2023 for the unit, which includes a portfolio of companies ranging from iFood in Brazil to PayU in India.

The results will add momentum to Bloisi as the group grapples with a tough market for internet companies and the legacy of a complicated business structure that embarrassed Bloisi’s predecessor, Bob van Dijk.

Cape Town-based Naspers is one of the world’s largest technology investors and listed its Prosus internet unit in Amsterdam five years ago but retained one CEO across both entities. In addition to heavy investments in e-commerce, the group owns a 25% stake in China’s Tencent, which has skyrocketed in value, disrupting the rest of the business. Van Dijk stepped down last September, shortly after dissolving a complex cross-shareholding structure between the two companies to deal with the disruption.

Efficiency improvements in key units such as classifieds, food delivery, payments and fintech, as well as cost cuts that included closing underperforming units, helped boost profitability in its e-commerce unit. IFood, a Brazilian online food delivery company run by new CEO Bloisi, used AI to cut costs by $100 million.

Bloisi talked about the possibilities of this technology in an interview with Bloomberg News.

“My story is adapting new technologies and moving quickly to figure out what can be done,” he said. “I have billions of customers around the world and the technology that changes everything in AI, the possibilities are 100 times greater.”

Bloisi will become CEO on July 1, taking over from interim CEO Ervin Tu, who will become chief investment officer and president.

Prosus chief financial officer Basil Sgourdos said in the same interview that the group’s e-commerce revenue was up 19% over the year. He compared this to an internal analysis that showed competitors were up around 7%.

“This is key to improving profitability, which is why we are implementing artificial intelligence and will continue to manage our costs well,” Sgourdos said. “Growth, profit and margin expansion are the main goals for the coming year.”

The group sold part of its stake in Tencent 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% under the buyback program. It will remain in force as long as the discount remains high, Tu added.

Net income for the year fell 35% to $6.61 billion, beating estimates of $6.25 billion in a survey of Bloomberg analysts.

Doing business

The company currently has $14.6 billion in cash, mostly reserved for investments.

Mergers and acquisitions continue to be an important part of how the group thinks about growth, Tu said. “We’re looking quite actively at whether it’s minority investment or control.”

On Monday at 11:40 in Amsterdam, Prosus shares increased by 0.56% to EUR 34.75. Naspers value in Johannesburg increased by 3.72%.

– With help from Thomas Hall and Andre-Pierre Du Plessis.

(Update with interview comments from CEO, CIO and CFO)