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Prosus goes on cost-cutting drive, targets profit in 2 years

Published 11/23/2022, 02:09 AM
Updated 11/23/2022, 04:55 AM
© Reuters. FILE PHOTO: Prosus' logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration
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By Promit Mukherjee and Toby Sterling

AMSTERDAM (Reuters) -Technology investor Prosus (OTC:PROSF) NV said on Wednesday it would launch a cost cutting drive as it seeks to turn a profit in its core businesses within in two years.

Tech companies globally are slashing costs, including by laying off staff, as inflation and rising interest rates have eaten into growth projections following the tech boom of the pandemic.

Prosus, a subsidiary of South Africa-based Naspers Ltd, has investments spread across online businesses including classifieds, food delivery, payments and educational software.

Until now it has financed losses at those businesses from Brazil to India with profits from a large investment in Tencent, China's largest video game company.

"Making losses now has become more expensive than before," Bob van Dijk, chief executive of Prosus told a media conference, citing a rising cost of capital.

The company, which had pumped billions of dollars into new business lines will now cut back on those expenditures and focus on improvements in its core businesses, where sales are still growing quickly, he said.

Prosus has already exited some business where there was minimal prospect of profits and will curtail travel and consulting costs, Van Dijk said.

He declined to comment on possible layoffs.

"If we can reduce those losses in fairly rapid way as we are committing to, that improves the value of the company," he said, adding these would help its core e-commerce business to turn a profit in the next two years.

© Reuters. FILE PHOTO: Prosus' logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration

The company on Wednesday reported an 82% drop in earnings per share to $1.81 for the half year ended Sept. 30, due to higher investment costs and a smaller contribution from its Tencent stake. Group revenue rose 9% to $16.5 billion.

Its revenues from e-commerce rose 41% even as losses from the portfolio widened to almost a billion dollars.

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