Trade Me on target with first-half result

Trade Me has bettered its prospectus forecast slightly with its half-year result.

Opening the books for the first time as a listed company, the online auction company has revealed a net profit of $36.4 million for the six months to December 31, up 5% on the same time last year.

Revenue was up 13% to $70 million.

EBITDA of $52 million was 2% ahead of forecast - and a new record for the company.

Earnings and dividend guidance remain unchanged from the prospectus. (No dividend was paid for the half year. Trade Me's prospectus states the company is aiming for a 5.1% full-year yield).

The company said today it expects to make a full-year profit of $65 million on on revenue of $144.8 million.

Chart courtesty CapitalIQ. Click to enlarge.

Trade Me chief executive Jon Macdonald said in a statement to the NZX the half-year result was pleasing.

“It’s good to deliver on the numbers we forecast in the IPO offer documents, especially given the backdrop of broader economic uncertainty over the past few months.”

Looking ahead, the expectation was that trading conditions would remain “challenging but passable” over the next 12 months.

“Trade Me collects numbers on many of the key categories underpinning consumer and business sentiment – job listings, houses for sale and rent, motor vehicle volumes – and we also have a lens on general retail, he said.

“When we look across all our categories, we expect a slow and hesitant recovery over the remainder of 2012.

“Despite this, the business is on track to deliver good revenue growth.”

Mobile remained a key focus area for the company, said Mr Macdonald.

“Already over 40% of the items sold on Trade Me are brand new. We’re working on arrangements with several partners to help integration with retailers, and we’ll continue to make the website a better place to buy new goods.”

There had been “no big surprises” in earnings across Trade Me’s various business lines in the last six months.

“The core general items marketplace performed in line with expectations, while in the classified businesses, the results were a little stronger than we’d anticipated.”

However, Mr Macdonald said display advertising had been impacted by the distraction of the Rugby World Cup, and a weak retail environment.

Trade Me shares are trading at $3.16

The Fairfax Media subsidiary's share's debuted on the NZX December 12 at $2.70, quickly jumping to $2.93 by their second day's trading.

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