Maturing online traders eye Asia | Stuff.co.nz

BEN HOLGATE AND ANDREW CLEARY

Maturing online businesses in New Zealand and Australia are eyeing emerging markets for future growth.

Trade Me is looking to expand beyond its home base of New Zealand to find growth as its online auctions business matures.

"We'll always keep an eye out for international opportunities," chief executive Jon Macdonald said after last week's annual results announcement.

"In the long term there's going to be a time when we'll expand offshore in one way or another."

International ventures were likely to be in developing markets, such as Asia, rather than Australia, which had a sophisticated market with established players, he said.

In Australia, Wotif.com chief executive Robbie Cooke expects a high dollar will be "situation normal" for some time, forcing the online travel agent to prioritise new business ventures targeting overseas travellers.

Reporting a 14 per cent increase in full-year profit last week, Cooke said Wotif was also open to acquisitions within Australia or abroad to add to its purchases of the Lastminute and AsiaWebDirect websites. "We're absolutely looking to build our product range outside Australia and New Zealand," the CEO said. "Lastminute has been nicely integrated into the business. The right acquisitions make sense, whether onshore or offshore."

Wotif said it would spend the next 12 months developing a package holiday product to compete with bricks and mortar travel agents such as Flight Centre and Jetset, in response to the growing appetite of Australians to holiday overseas.

Net profit rose to A$58 million from A$51m in the prior year, boosted by strong growth in international flight bookings and the uptake of its mobile phone and tablet applications. That was marginally ahead of previous company guidance for earnings in the range of A$55.5m to A$57.5m. Revenue rose 5 per cent to A$145m, and a final dividend of A13.5? was announced.

Wotif said it sold $110m worth of flights over the year, with the two-year-old business unit contributing 9 per cent of the total value of all bookings sold. Bookings for domestic and international flights should continue to grow in the current financial year while reservations in the core Australian accommodation business will remain challenged, Cooke said.

"It's still a challenging market out there, particularly in the domestic space. We sell a lot of domestic accommodation, and the leisure side of that has been absolutely tougher with a stronger dollar while business travel hasn't been impacted," the CEO said.

Wotif has also launched a new service for booking holiday rental accommodation, a unit which Cooke said could grow to be as large as the flights division. The company has also doubled the number of staff dedicated to its Arnold booking platform targeted at the corporate market.

Another source of growth in the year ahead should be the company's mobile phone and tablet application, which combined accounted for 14 per cent of visits and 9 per cent of room night sales in 2012.

Trade Me's general items marketplace division showed signs of maturation in the 2012 financial year, with revenue rising 5 per cent to $62m. General items revenue contributed 44 per cent of total revenue, which grew 14 per cent year-on-year to $142m - about $4m below Bloomberg consensus forecasts.

Adjusted earnings before interest, tax, depreciation and amortisation (ebitda) increased 8 per cent to $107m, in line with market expectations.

However, reported ebitda, which included a $3.3m one-off gain from the sale of its AutoBase investment on April, rose 11 per cent to $110m. Trade Me reported an inaugural 8 per cent increase in net profit after tax to $75.6m. The company, which is 51 per cent owned by Fairfax Media, was spun out from Fairfax as a separately listed company in December.

Macdonald said group buying site Treat Me came in below "a bullish forecast". "We view group buying as a young and uncertain industry, but one that still has potential," he said.

Deutsche Bank analyst Arie Dekker said "the underlying result was strong and the performance of the key growth driver, classifieds, very encouraging".

Macdonald warned that the short-term outlook for the sluggish New Zealand economy was "frustratingly more of the same".

Trade Me shares fell 3 per cent yesterday to close at $3.01.

AFR

- ? Fairfax NZ News

Source: http://www.stuff.co.nz/business/industries/7549001/Maturing-online-traders-eye-Asia

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