Trade Me lifts first half profits

TradeMeTrade Me lifted first-half profit 16 per cent signalling an end to an investment phase for the online marketplace and business, although the result fell just short of analyst expectations.

Net profit rose to $46.1 million in the six months ended December 31, from $38.5 million a year earlier, the Wellington-based company said on Thursday.

Revenue gained 9 per cent to $114.9 million and earnings before interest, tax, depreciation and amortisation were up 12 per cent to $76.1 million, just missing Forsyth Barr’s forecast for operating earnings of $78 million on revenue of $117 million.

Chairman David Kirk said Trade Me had delivered an “excellent result” to investors.

“The return to good profit growth in the first half of this year marks the successful completion of our multi-year investment phase,” Kirk said.

“We’ve strengthened the business and set it up well for further growth, and we’re very pleased to have achieved our ambitions from this investment.”

In 2013 Trade Me embarked on freshening up an offering that was becoming dated while at the same time facing increased competition and the growing importance of mobile technology.

It did so by beefing up staff numbers, introducing new products such as its recently announced buyer protection programme, and investing in the likes of peer-to-peer lender Harmoney.

Trade Me also quit businesses that were “increasingly difficult to justify prioritising time and money”, given other opportunities. It sold accommodation aggregator Travelbug and online engine Bookit, with $497,000 of gains from those sales.

CEO Jon Macdonald said Trade Me had been focusing on following through on promises made to investors.

“We said we would reinvest in people, product development, marketing and sales in order to build a better business and then deliver growth, and that’s what we’ve done. As well as delivering on our investment, it’s pleasing that we’ve shown our ability to contain costs as forecast too.”

The company affirmed annual guidance for EBITDA and operating profit growth rates to exceed the 2016 rates of 4.5 per cent and 3.5 per cent respectively.

Its shares last traded at $5.07 and have gained 21 per cent over the past 12 months.

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