UPDATE: Trade Me seeks acquisitions, looks at longer bank loan
By Paul McBeth
Feb. 20 (BusinessDesk) - Trade Me, the online auction site spun out of Fairfax Media in 2011, is in the market for more acquisitions, and may extend its $200 million bank loan.
The Wellington-based company made three purchases last year - the holidayhomes.co.nz directory site, Tradevine inventory management tool and Autobase classifieds site - and plans to keep doing so.
Chief executive Jon Macdonald said the company plans to keep investing as it seeks new growth opportunities, and "we'll likely augment our portfolio with judicious investments over the coming years."
Macdonald told analysts there were "clear opportunities in the classifieds business"
"It's quite nice to have three smallish acquisitions under our belt, and we're going to continue to grow out muscle in this space," he said.
The online auction site held $36 million in cash and equivalents as at Dec. 31, and chief financial officer Jonathan Klouwens said Trade Me is very happy with the facility, it's terms and is looking at extending it.
Trade Me took on the $200 million facility as part of Fairfax Media's partial float, when the Australian firm then drew down $166 million cash as part of its exit.
The online auction site today announced a 2.7 percent increase in profit to $37.4 million, or 9.43 cents per share, in the six months ended Dec. 31. That beat the revised forecast from its initial public offer of $34.8 million, and just short of Forsyth Barr analyst Rob Mercer's expected $38.1 million.
Earnings before interest, tax, depreciation, amortisation and depreciation climbed 14 percent to $59.2 million, and revenue gained 18 percent to $80.4 million.
Macdonald said the company is comfortable with analysts' forecasts for annual earnings, with trading in the last six weeks consistent with the first half. Trade Me is expected to post net profit of $77.5 million on sales of $163.9 million, based on the median forecasts compiled by Reuters.
The shares fell 2.7 percent to $4.29 in trading yesterday, and have gained 11 percent this year.
The stock is rated an average 'hold' based on nine analyst recommendations compiled by Reuters, with a median target price of $4.145.
Trade Me's board declared an interim dividend of 7.5 cents per share, payable on March 26 for shareholders on the register as at March 15.
Trade Me's general items revenue grew 7.5 percent to $33.12 million on slightly softer volumes than expected, while classifieds jumped 35 percent to $33.1 million as the company grew its market share of job ads. Other revenue climbed 10 percent to $14.1 million.
Macdonald said Trade Me has expanded its mobile team and built a suite of applications with a third of visits coming on mobile devices, twice the number a year earlier.