SEEK Ltd (SEK)

CommSec CommSec

 

12 August 2020

Results 

Full Year 2020

Full Year 2019

Change

Total Revenue ($m)

1,577

1,537

+3%

Seek Aust/NZ Revenue ($m)

387.2

440

-12%

Seek Investments Revenue ($m)

947.8

827.6

+15%

Reported EBITDA ($m)

414.9

455

-9%

Net Profit ex sig items ($m)

90.3

184.8

-51%

Net (Loss)/Profit incl sig items ($m)

(111.7)

180.3

n/a

Final Dividend ($)

-

0.22

n/a

SEEK (SEK) swings to full year loss on COVID-19 impacts to job markets

What happened?

  • Online job listing site operator, Seek Limited (SEK) reported full year profit results for the period ending 30 June 2020. While revenue for the year rose by 3% to $1.58 billion, Earnings before Interest, Taxes, Depreciation & Amortisation (EBITDA) fell 9% and the company swung to a full year loss of $111.7 million due to $202 million in significant items. Profit was still halved to $90.3 million if those items were excluded.
  • SEK had previously announced before the release of its profit results that it would not be paying a final dividend for FY20.

Why did it happen?

  • The Covid-19 pandemic has played a big part in SEK’s earnings result, particularly for the 2H20, while the first half was impacted by weak macroeconomic conditions. This meant that job listings across the ANZ & Asia regions were weak with job ad volumes down 65% on the year before at the worst levels of the second half, but saw a slight improvement in the fourth quarter.
  • Seek ANZ saw volumes fall 17% which played a part in the 12% drop in revenue to $387.2 million and 15% slide in EBITDA. Seek Asia also experienced declines in both revenue and EBITDA with the Hong Kong market hit particularly hard.
  • The majority of the $202 million impairments realised by SEK were in relation to its Latin America (Latam) businesses, particularly in Brazil and Mexico. 
  • SEK also invests in other aspects of human capital like Chinese recruitment services provider Zhaopin, online education services (Coursera), HR cloud based solutions and contingent labour (contractors/casual workers) known as the business unit SEEK Investments. This unit managed to lift both revenue and EBITDA for the financial year.

Where to now?

  • Due to the uncertainty of Covid-19, SEK has decided not to provide guidance for the upcoming financial year, stating “it is impossible to accurately forecast the duration or shape of the recovery out of Covid-19”, but instead released some key assumptions. These include job ad volumes gradually recovering through FY21. However ANZ volumes are expected to remain below FY20 peaks. Capital expenditure is also anticipated to be roughly in-line with FY20.
  • If those assumptions play out, SEK would expect revenue of ~$1.47 billion with EBITDA around $330 million and reported NPAT of $20 million. 
  • SEK’s share price has fallen sharply immediately after the release of the results and is underperforming the ASX 200 YTD (as of 12/8/20).

Tags:

SEK

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