Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


UPDATE: Trade Me profit growth slows in 2014

UPDATE: Trade Me profit growth slows in 2014, forecasts 'subdued' earnings for 2015

(Adds CEO comment starting in fourth paragraph, updates shares)

By Tina Morrison

Aug. 20 (BusinessDesk) - Trade Me Group, New Zealand's largest online auction site, posted slower profit growth for 2014 and warned earnings would remain "subdued" in the coming year as it reinvests in its business.

Trade Me profit rose to $80.1 million, or 20.2 cents a share, in the 12 months to June 30, from $78.6 million, or 19.84 cents, a year earlier, the Wellington-based company said in a statement. Revenue increased 9.7 percent to $180.1 million while expenses jumped 26 percent to $51.4 million.

Profit growth has slowed since the company was spun out of Fairfax Media in 2011 in an initial public offering. The latest year's 1.9 percent increase in profit lags 2013's 4 percent gain and an 8.4 percent pace in 2012. The company today forecast another year of "subdued" earnings growth with revenue forecast to increase at low double-digits and another year of "quite substantial" expense growth as it adds more staff, faces higher costs from an expanded business and spends more on promotion to position the company for longer term expansion.

"We expect to grow revenue and earnings before interest, tax, depreciation and amortisation over the coming year but our focus will be on improving the products we offer, strengthening our sales and account management and ensuring stronger growth in the medium to long term," said chief executive Jon Macdonald. "It's certainly our intention that we will start to see greater earnings growth in FY16."

Trade Me posted a 4 percent increase in annual Ebitda to $128.7 million, ahead of the $125.8 million mean analyst estimate compiled by Reuters. The company is forecast to increase Ebitda by 3.9 percent to $133.7 million in the 2015 financial year, accelerating by 6.2 percent to $142 million in 2016, according to the Reuters estimates compiled before today's announcement.

Still, Macdonald said the company needs to get traction in its general items auction business which is proving to be "hard graft" as it comes up against larger rivals including Amazon and ASOS.

In Trade Me's general items auction business, Ebitda declined 2.1 percent to $50.8 million in 2014 as revenue slid 1.1 percent.The value of general items sold declined 0.4 percent in the year, while the volume slid 4.5 percent and the average sale price rose 4.3 percent, reflecting a trend of fewer higher priced items.

"We want that business to be growing," Macdonald said. The company is working on improving the functionality and design across its general marketplace, enhancing its mobile offering and increasing its online retail offering by bringing new overseas retailers onto the site, he said.

"We have learnt a lot over the last year and I think we are onboarding those retailers a lot more effectively than we were a year ago," he said. Recent sellers to join Trade Me include mytools, surfstitch, cosmeticsnow and apparelsave.

"We are working hard on it and we have found it difficult exactly to predict when we will be able to demonstrate that meaningful growth," Macdonald said.

Trade Me's classified advertising unit increased Ebitda 12 percent to $62.9 million as total revenue rose 23 percent. Property advertising revenue gained 12 percent, motor vehicle advertising increased 29 percent and job advertisements advanced 26 percent. Earnings for the company's other businesses, which include advertising, travel, holiday houses, online dating, Pay Now and online insurance comparisons, slipped 3.5 percent to $15 million as revenue rose 2.8 percent.

The company expects to add 96 new employees this year after taking on an extra 54 last year, 26 of whom were in technology roles. That would take total staff numbers to 429 by the end of the 2015 financial year from 333 in 2014.

"We are still hiring assertively, especially to build up our technology team so that we can speed up our product development," Macdonald said.

Employee expenses rose 16 percent in the past year to $24.6 million, while the company's web infrastructure expenses increased 5.3 percent to $3.2 million and promotional costs jumped 168 percent to $7.4 million.

Trade Me will pay a final dividend of 8.4 cents a share on Sept. 23, taking the annual dividend to 16 cents, compared with 15.8 cents last year.

Shares in Trade Me slipped 1.1 percent to $3.48, taking their decline so far this year to 13 percent. The stock is rated an average 'hold' according to analysts polled by Reuters.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Fairfax Moves To Create Modern Newsroom

Fairfax Media New Zealand continues its newsroom transformation this week, with a proposal to further organise its editorial operations into focused, local teams and specialist national topic areas. More>>

ALSO:

Dairy: Fonterra Forecast For 2015/16 Season

Fonterra Co-operative Group Limited has today reduced its forecast Farmgate Milk Price for the 2014/15 season to $4.40 per kgMS. Along with its previously announced forecast dividend range of 20-30 cents per share, the change amounts to a forecast ... More>>

ALSO:

BusinessDesk: SkyCity Lifts Minimum Convention Centre Investment To $430M

SkyCity Entertainment Group, the casino operator, has lifted the minimum it will invest in the Auckland International Convention Centre to $430 million and said total costs including land may be $450 million to $470 million. More>>

Statistics: Drop In Dairy Prices Leads Fall In Exports

Total goods exports fell $240 million (5.5 percent) to $4.2 billion in April 2015 compared with April 2014, Statistics New Zealand said today. More>>

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>


BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>

BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news