20 Feb 2014

Trade Me looks to profit growth in 2015

11:48 am on 20 February 2014

Trade Me says it's a challenge to try and grow the business while remaining profitable, and it expects its reinvestment of money back into its operations will pay off in the next financial year.

On Wednesday, the online auction website's stock dropped as much as 9 percent after the company reported a small rise in first-half net profit.

Trade Me reported a near 2 percent rise in net profit to $38 million for the six months to December, compared with $37.3 million last year.

Trade Me chief executive Jon Macdonald says he expects stronger profit growth over the 2015 financial year.

He says Trade Me's general items market place still contributes aroudn 40 percent of its revenue and the sale of used goods is an established business which has been around for about 15 years.

Mr Macdonald says over 40 percent of everything sold on Trade Me is brand new and the firm sees a good opportunity to grow by participating in the growth of online retail.

"So we've been doing a lot of work to ensure we've got a good offering and we've got good relevant inventory on Trade Me, but the fact of the matter is online retail's a pretty tough gig and so we're still working to see proper growth in that part of the business."

Mr Macdonald says reinvestment is occuring in three key areas - product development, the overall team and promotions.

He says the investment is occurring across the board with a good portion going into the general items business to restore that part of the business to growth, with another portion going towards the classifieds business.