21 Feb 2013

Trade Me half-year profit up 3%

7:30 am on 21 February 2013

Half-year profit at Trade Me has lifted following a strong performance by its classified business.

The online auction site's net profit rose to $37.4 million in the six months to December, 3% higher than the same period a year ago. Gross earnings rose 14% to $59.2 million.

The company said its classified businesses Trade Me Motors, Trade Me Property and Trade Me Jobs delivered a strong performance which looked set to continue through 2013.

Chief executive Jon Macdonald said its main auction arm has been subdued.

Trade Me says it will be working on opportunities in new goods and online retail to help bolster its general items category where trading has fallen.

Mr Macdonald said advertising business fell short of revenue expectations because offshore publishers gained market share, tempering the migration of spending online.

Revenue rose 18% to $80.4 million, helped by a strong performance from its classified property, vehicles and jobs businesses, while sales in its main auction arm - called general items - also rose, but the number of items sold fell due to promotional activities.

About 40% of all goods sold on Trade Me are brand new, and Mr Macdonald said he sees that as a substantial long-term growth area to help boost its general items category.

He said there is an opportunity in new goods and online retail, but it's also a challenge because there are a lot of new entrants to online retail, as well as strong competition from offshore.

Mr Macdonald said Trade Me is looking at overhauling its website and to start advertising on billboards and television to promote it as more than an auction site.

Trade Me will pay an interim dividend of 7.5 cents per share.

Shares fell 10 cents to close at $4.31 each.