Seek Set To Find A Slower Year
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While Online jobs site Seek told the market yesterday that expects to report full-year earnings and revenue at the top end of its guidance range - despite revealing three significant items totalling $142 million - investors just didn’t believe the positive spin and sent the shares down 9% at one stage.
The company says underlying earnings for the year to June 30 will be up around 15% for 2017-18, at the top end of its 14% to 15% guidance range, with revenue growth of about 24%, towards the top end of its 20% to 25% range.
The shares ended at $20, down 8.7%.
Seek surprised (the profit news was an attempt to ease the shock) when it revealed it expects to book a non-cash impairment charge of $178 million against the value of its operations in Brazil and Mexico, as well as a non-cash gain of $36 million on its investment in Chinese career and professional social network, Maimai.
That’s a total impairment charge of $142 million.
But the news that worried investors was the change in Seek’s growth outlook for 2018-19 to a noticeably slower pace.
Seek said it new sees revenue growth for the 2019 financial year in the range of 16% and 20% compared to the revenue growth figure for the year to June of 24%.
And earnings before interest, tax, depreciation and amortisation in 2018-19 (EBITDA) is expected to be between 5% and 8%, compared to growth of about 15% for 2017-18.
Regarding Brasil Online SEEK said "deterioration in economic and political conditions have impacted financial performance" leading to a $119 million impairment. And for the OCC platform in Mexico: "Macro and political uncertainty, competitive intensity, operational issues in education and the need to reinvest to evolve the business model have impacted the outlook for future cashflows" leading to an impairment charge of $59 million.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.