Trade Me profit growth slows in 2014 20 Aug 2014
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
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)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more