Takealot on track for first profit since 2011, reports 57% reduction in loss at half-year

Takealot, South Africa's largest ecommerce company, experienced a step-change in its business operations in the past six months to September 30, and is on track to be profitable for the full financial year, for the first time since it was launched in 2011.

Takealot Group chief financial officer Tessa Ackermann said in a briefing Tuesday that the Prosus subsidiary's earnings before interest and tax (Ebit) loss had reduced by 57% in the six month period just passed, as the group focused on sweating efficiencies from its infrastructure and distribution centres, and spent very little on capital expenditure.

Former Prosus CEO Bob van Dijk had set a target in 2023 that all of Prosus' e-commerce companies had to be profitable by 2025.

"The next sixty days are going to be crucial for us. It is the holiday season…We intend to continue to follow our strategy, limit capital expenditure to only the essential spending, and hopefully, by March, we will be in a position to report our first profit in our history," she said.

Frederick Zietsman, Group CEO of Takealot Group, said their current strong growth had followed a "lot of hard work in the past" including extensive investment in infrastructure, technology and platforms, particularly after the Covid pandemic, when all online businesses were experiencing substantially more demand than they did prior to the pandemic.

In addition, the company was benefiting from an improved macroeconomic environment, with inflation low, interest rates having fallen, while the Two Pot Pension payouts had provided additional credit to consumers as their debt reduced.

In the past six months, and in spite of "almost weekly announcements of new foreign competition in our markets," the group continued to broaden its market reach and successfully launched external fulfilment services to support third-party sellers, said Zietsman.

Takealot's revenue grew 23% in local currency, excluding mergers and acquisition, with gross merchandise value (GMV) up 16% and adjusted earnings before interest, tax, depreciation and amortisation (aEBITDA) increasing by $10 million to $28m.

Takealot.com, including the newly launched TFS fulfilment business, saw outstanding results with revenue up 32% to $385m. GMV rose 17%, supported by 16% order growth.

Takealot's subscription programme, TakealotMORE, continued to strengthen its customer loyalty and cross-sell opportunities, with subscribers now driving 21% of group GMV. Additional partnerships were being discussed to broaden value further for customers, said Zietsman.

Mr D achieved 12% revenue growth to $65m, supported by 14% GMV growth with the grocery segment accelerating GMV by 47%. Mr D delivered aEBITDA of $3m in the first half, maintaining profitability while scaling its offering across food, grocery, and retail categories. It was expected to remain profitable in the second half, said Ackermann.

Questioned on the possible use of drones for food and product delivery as is done in some developed countries, Zietsman said this was unlikely in the short term due to aviation regulations and other factors, but it might be possible to consider drones for transport functions between the group facilities, over the longer term. These had potential to speed up operations, improve efficiencies in the group and provide better customer services.

He said an urgent problem that needed tackling in South Africa was providing cheaper and faster internet connectivity to all South Africans, and making more affordable handsets available to more consumers, because the economy would not be able to grow without greater access to the digital economy.

BUSINESS REPORT