Trade Me posts slower earnings growth in 1H, invests for future profits

Wednesday 19th February 2014

Trade Me Group posted a slower pace of earnings growth in the first half of its financial year as New Zealand's largest online auction site invested in marketing and more staff to improve its service and position it for higher profit growth next year.

Net profit rose 2 percent to $38 million in the six months ended Dec. 31, slower than the 2.7 percent growth in earnings in the year earlier period, the Wellington-based company said in a statement. Profit was below First NZ Capital's estimate of $40.9 million. Revenue increased 7 percent to $85.7 million while expenses rose 19 percent to $25.2 million.

Trade Me employed an extra 50 people in the past six months, taking its total headcount to 350, as it strives to improve its web site, adding more services and functions, in order to grow future profits. Trade Me will probably increase full-year profit 7 percent this year, before picking up to an 11.2 percent pace in 2015, according to analysts polled by Reuters.

"We've embarked on a period of reinvestment which will impact short-term earnings growth but ensure the company's long-term growth and success," said chairman David Kirk. "We are convinced this is the right approach for Trade Me and we believe investment now will result in stronger market positions and greater growth opportunities in the future."

Investment in the business had gone well and Trade Me will continue to "invest assertively" in the second half of the company's financial year, Kirk said.

Trade Me will pay a first half dividend of 7.6 cents a share on March 25.

The shares last traded at $4.05, and have slipped 0.3 percent this year.

BusinessDesk.co.nz

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