Trade Me posts flat 1H profit; warns FY18 profit will grow at a slower pace than FY17
By Tina Morrison
Feb. 28 (BusinessDesk) - Trade Me, New Zealand's largest online auction site, said earnings didn't budge in the first half as its expenses grew faster than revenue and it expects full-year profit to grow at a slower pace than last year.
Net profit rose was unchanged at $46.1 million, or 11.6 cents per share, in the six months ended Dec. 31, the Wellington-based company said in a statement. Total revenue gained 6.8 percent to $122.7 million, lagging behind a 9.2 percent rise in total expenses to $43.9 million.
Trade Me's revenue lift in the latest period was driven by listing fees from its classified businesses, where revenue was up 14 percent to $67.9 million, making up 55 percent of the company's total revenue. However its expense growth weighed on profit with cost of sales up 24 percent to $9 million and employee costs up 12 percent to $19.6 million as it hired more staff, taking the number of full-term equivalent staff to 564 at Dec. 31, from 514 at June 30.
The company said it expects earnings before interest, tax, depreciation and amortisation and its operating net profit after tax to grow in the 2018 financial year, but at a slower pace than in the 2017 year as it ramps up investment. Total revenue growth for the full year will be similar to 2017, although it said there was uncertainty around revenue from its property division due to the volatile housing market. In the 2017 year, Trade Me revenue increased to $234.9 million from $218 million, while after-tax profit lifted to $94.4 million from $74.9 million.
"The first half of the F18 financial year has broadly tracked to our expectations," said chief executive Jon Macdonald. "We will continue to invest at a rate slightly above revenue growth in F18 and we expect to deliver year-on-year ebitda and operating npat growth in F18, albeit at lower growth rates than F17 due to this higher level of investment."
Trade Me will pay a 9.1 cents per share dividend on March 20, up from 8.5 cents a year earlier.
The shares last traded at $4.30, and have dropped 17 percent over the past year.