Online jobs listing provider Seek has slashed its interim dividend after warning about the potential fallout from the coronavirus crisis which is worsening outside of China.
Most of Seek’s revenue from Australia and Asia and the move to cut the dividend sends a message that the company’s board is hunkering down with so much uncertainty about.
On top of that the half’s results were hit by the protests and unrest in Hong Kong which is one of its major markets in the region while the increasingly sluggish Australian jobs market didn’t help.
Interim dividend was set at 13 cents a share, down from 24 cents a year ago.
The cut was driven by the dividend policy change announced last August under which the payout will fit the company’s investment strategy first, and in this case, a weather eye on what is happening with the virus.
The presentation accompanying the results commented that the lowered dividend was “Paying at the lower end of the range given the significant capital we deployed in M&A during H1 20 and increased uncertainty caused by Coronavirus.”
First-half profit fell 24% largely due to fewer advertisements in Australia and Hong Kong.
Chief executive Andrew Bassat says the subdued economic conditions affected overall net profit, which was $75.6 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed by 4% to $247 million.
However, he is pleased revenue was up 15% to $883.7 million.
“Our results will fluctuate somewhat with the (economic) cycle but in the areas we can control we are pleased with our progress,” Mr. Bassat said.
Seek’s Australian operation grew revenue by one percent despite an 8% fall in ad revenue.
Other services, such as talent search, helped overcome the Australian ad revenue loss.
“Our near-term results will be impacted by the Coronavirus, softer economic conditions and our investment bias,” Mr. Bassat said.
“Due to these factors, we are significantly under-earning relative to our true earnings potential. Over time we expect China and the rest of the world to return to more normal conditions, and are confident that our long-term strategy and aspirational targets remain intact.
At last year’s annual general meeting, Seek confirmed guidance for the 2020 full year of 15-18% revenue growth, net profit of $145 million to $155 million and an increase of 8-11% in EBITDA.
However, the company said on Tuesday it could not reliably update guidance for the full business, due to an inability to predict the impact or recovery from the Coronavirus.
That’s why the interim dividend was crunched.
In yesterday’s volatile ASX session, Seek shares, fell, rose and ended 1.7% higher at $22.81.
