Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


Seek slumps on earnings slowdown warning

Lilly Vitorovich  |  06 Aug 2018Text size  Decrease  Increase  |  
Email to Friend

Page 1 of 1

seek employment article

SYDNEY [AAP] - Jobs site Seek has had nearly $700 million wiped off its market value after flagging a sharp slowdown in forecast earnings and revenue growth, as well as higher-than-expected investment costs.

The group will book a $178 million impairment charge against its operations in Brazil and Mexico for 2017/18, saying deteriorating political and economic conditions in those locations are impacting performance.

Chief executive Andrew Bassat said the cut to the book value of the Brazil and Mexico operations was "unfortunate".

"Performance has been disappointing but we remain committed to these markets," he said in a statement.

"A turnaround of Brasil Online and (Mexico) will require more time and better economic conditions.

"The likely short-term outcome is that financial performance will be worse before an expected sustained improvement."

Morningstar analyst Gareth James said Seek's trading update, which includes several one-off items and rising investment costs, unnerved investors.

"The guidance is becoming more complicated," he said, noting that Seek is also changing how it presents its financial results as announced in June.

"It's quite difficult to verify to what extent costs are capital expenditure for growth and to what extent its just an increase in costs," he said.

However, Seek's non-cash impairment charge against the value of its operations in Brazil and Mexico should not have come as a surprise as the difficult trading environment had previously been flagged, Mr James said.

Seek shares - which have risen sharply in recent months together with other tech stocks - were down $2.00, or 9.2 per cent, to $19.91 on Monday afternoon, giving it a market cap of $6.99 billion, down from $7.69 billion on Friday.

Seek has forecast earnings before interest, tax, depreciation and amortisation growth of five to eight per cent for the year ending June 30, 2019 , compared with expected growth of about 15 per cent for 2017/18 - a result at the top end of its guidance range.

Revenue is expected to be up by 16 to 20 per cent for 2018/19, down from growth of about 24 per cent for 2017/18.

The company said the gap between revenue and earnings growth was a result of higher investment - an 80 per cent lift in operating expenditure - in its businesses in China, Australia-New Zealand and Asia.

Mr Bassat said a turnaround of its operations in Brazil and Mexico will take more time and better economic conditions.
Seek will also record a non-cash gain of $36 million on its investment in Chinese career and professional social network, Maimai.


AAP logo image

© [2018] Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend