Strong growth as Ecorp units set sail for profits

Australian Internet company Ecorp Ltd. Wednesday announced that it achieved revenues for the six months to December 2000 of A$40.2 million (US$21.3 million). For the businesses operating before December 1999 the combined EBITDA loss fell to A$3.8 million, down from A$6.95 million for the corresponding period the year before.

Overall, Ecorp returned a first-half loss of A$20.04 million. The comparative loss for the same period 12 months ago was A$10.93 million.

Analysts expect Ecorp to post a net loss for the full year of A$29 million, and deputy chairman Jeremy Philips said he was comfortable about meeting with market expectations.

Each of the Ecorp properties grew revenues strongly, with portal Ninemsn up 128 percent, auction site eBay up 207 percent, mortgage originator Wizard Financial Services Group growing 225 percent and Ticketek, the most mature of the units, growing 29 percent.

Restructuring of the Ticketek business as the model shifts online saw a significantly better result, with EBITDA profits increasing by 149 percent, excluding a one-off non-cash charge of A$2.2 million.

Philips said he expects all these Ecorp groups to be profitable within 12 months.

There are no comparative figures for Ecorp's two latest joint ventures, with online broker Charles Schwab and recruitment service provider Monster, although Philips said the company was pleased with the progress of the two units.

He acknowledged the cost cutting by Charles Schwab in the US but said this would have no real impact on the Australian joint venture. "Yes, it (Charles Schwab) has been cutting expenses and its revenues are down, but these are short-term fluctuations. We knew we were going into a tougher part of the cycle when we went into this deal."

Ninemsn experienced considerable improvement in its operating margin during the period, on strong revenue growth. However, a non-cash write-down of its investment in online retailer Dstore (Ecorp's share of which was A$3.7 million), impacted its result.

Despite the slowdown in the rate of growth in online advertising, Philips remains confident. "There are two things to remember. Online advertising is still a much smaller percentage of the advertising mix in Australia and if it just grows to the same percentage of the mix as in the US, as we would expect, then that represents strong growth."

He said the US market was also much more exposed to dot-com advertisers. "Traditional advertisers represent a greater proportion of the mix in this market, so we wouldn't expect to experience the same decline."

Philips was also bullish on the auction front. While there is some dispute over how the audiences are tracked, Philips said eBay is now recognised as a market leader.

He would not be drawn, however on speculation about the future of Sold.com. Stories emerging regularly from within Fairfax's own media properties suggest that the f2 auction site will be sold to Yahoo. Philips only comment was that the competitive mix over the next 12 months was less important to eBay's ability to deliver than solid execution of the strategy.

The focus for the company over the next 12 months was on taking existing businesses into profitability, he said.

Story courtesy of The Industry Stnadard Australia: http://www.thestandard.com.au

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