Not Even Africa’s Most Valuable Company Is Immune To Covid-19
Naspers, a multinational internet group headquartered in South Africa, has released its financial report for the year which ended on 31st March. As the coronavirus pandemic’s disruption cuts across several verticals, Africa’s most valuable company is not exempted.
Naspers’ eCommerce business arm somehow strengthened the company’s year-end position. The improved profitability alongside a reasonable amount of net cash dipped in sufficient liquidity delivered a significant growth in revenue.
The orders for its food delivery business, for instance, climbed by 102 percent, while the revenues jumped by 99 percent. Its classifieds business, on the other hand, grew by nearly half, the internet giant said.
Between May and June—two months in South Africa’s record-breaking coronavirus-inspired lockdown—the country’s transactions for eCommerce hit its highest point ever.
The country’s largest payments provider, DPO South Africa, revealed that May’s last weekend saw an increase in transactions per minute, one that is four times higher than what was experienced during Black Friday in 2019.
The pandemic is believed to have catapulted digital commerce to a position which was previously expected to not come around until 2025. This is part of an impactful revolution in the retail segment, one whose boost across Africa was foretold before the pandemic took strong hold.
African eCommerce giant, JUMIA, witnessed a spike in consumer and seller interest due to the demand for groceries and essentials growing four-fold in the first quarter of 2019.
Naspers’ overall revenue growth in e-commerce, adjusted for acquisitions and disposals, grew 32 percent in local currency, representing a 6 percent acceleration year on year. Like other established African businesses who took advantage of the boost in eCommerce, the company invested USD 1.3 Mn to expand its payments ecosystem.
In 2018, Naspers’ eCommerce business contributed 18 percent of the company’s total revenue. Revenues grew 15 percent or 32 percent in local currency and adjusted for the impact of acquisitions and disposals.
In India, where the bulk of Naspers’ digital investments is concentrated, coronavirus made more than 40 per cent of consumers are dial up on health and wellness spends. eCommerce adoption advanced by two-three years, according to Financial Express. The Facebook India–BCG report shows that around 50 per cent consumers expect to increase their eCommerce spend.
|USD 66 Mn
|Digital payments security in India
|USD 163 Mn
|Indian consumer lending
|USD 199 Mn
|Payments service in Turkey
|Red Dot Payment
|USD 48 Mn
|Payments solutions in Singapore
|USD 81 Mn
|Social eCommerce in India
|USD 100 Mn
|Food delivery in India
Still, Losses Prevail
Despite the promises of a boosted eCommerce segment, Nasper did not exactly finish the year in grand style. The pandemic did affect other parts of its business, as is experienced a fall in pre-tax profit. Its net profit, also, more than halved for the 2020 fiscal year, though the company believes it is in a strong position to navigate the effects of Covid-19.
It reported a 4.5 percent drop in profit, and that is because it invested some of its money in its food delivery business to drive growth. Meanwhile, core headline earnings per share went down to USD 6.57 from USD 6.87 a year earlier. According to Naspers’ own estimate, the earnings could drop by between 10 percent and 16 percent.
“The group is focused on the long term and expects to benefit from a further acceleration of the underlying trend toward online e-commerce companies brought about by the pandemic.
We face the challenging period from a position of relative financial strength and with sufficient liquidity to navigate the changing environment, to continue to invest in our businesses to position them well for future recovery, and to continue to seek out new opportunities,” the firm said.