(Updates with closing share price in third paragraph.)
Nov. 29 (Bloomberg) -- Naspers Ltd., Africa’s largest media company, said first-half profit fell 46 percent as development spending almost doubled while it made fewer acquisitions.
Net income declined to 1.87 billion rand ($224 million) in the six months through September, from 3.45 billion rand a year earlier, Naspers said in a statement today. That missed the 2.36 billion rand average of three analyst estimates in a Bloomberg survey. Sales rose 17 percent to 18.5 billion rand, boosted by rising Internet income, the Cape Town-based company said.
The stock dropped 0.7 percent to 353.45 rand at the 5 p.m. close in Johannesburg.
Naspers will invest in acquisitions instead of returning money to shareholders, Steve Pacak, its finance director, said at a shareholders’ meeting on Aug. 26. Naspers spent more than $532 million on acquisitions last year. The company is focusing on growing existing operations as rising prices for internet companies make value harder to find, it said in June.
While revenue growth should be “fairly robust” during the second half, the focus on organic expansion and developing new technologies will affect profit growth, Naspers said.
“We continue to believe that this strategy is sound and will stimulate long-term growth,” it said. “Our funding structure remains sound” with net debt, excluding satellite leases, of 6.8 billion rand.
Rising Development Costs
Development costs in the six months rose to 1.1 billion rand from 631 million rand, it said.
Naspers said it concluded acquisitions of internet service businesses during the period for a total of $162 million. Those include a 68.2 percent interest in Vipindirim Electronic Services Plc, or Markafoni, a Turkish e-commerce group. In Italy, Naspers acquired a 70 percent stake in online shopping and price comparison company 7 Pixel SRL, and it bought Ukraine online classifieds company Slando Ltd.
The company’s revenue from its 35 percent stake in Tencent, China’s largest Internet service provider, rose 46 percent to 4.9 billion rand. The South African company’s stake in Russian Internet group Mail.ru, which has a stake in Facebook Inc., also helped boost earnings, Naspers said.
The pay television unit increased subscribers by 269,000 to 5.2 million in the period, it said.
--Editors: Kim McLaughlin, Robert Valpuesta
To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at firstname.lastname@example.org
To contact the editor responsible for this story: Kenneth Wong at Kwong11@bloomberg.net