SEEK hit by $141m impairment for Chinese jobs site Zhaopin

The news comes three-and-a-half years after SEEK announced a $697 million sell-off in its Chinese investment, which was completed by May 2021 and took the Australian company's holding in Zhaopin from 61.1 per cent to 23.5 per cent.

It was a significant move for the company as at that time Zhaopin accounted for almost half of SEEK's revenue, having turned it around from a loss-making venture 15 years prior.

But even with its minority stake, SEEK is still suffering headaches from the Zhaopin investment with a $120 million impairment to the carrying value of its equity, and a further $21 million impairment in its net consideration receivable from the Chinese business. The latter relates to payments from the previous sale that are linked to Zhaopin's fair value.

The devaluation came about after expectations for a quick return to broad-based growth in the Chinese economy failed to materialise after the easing of COVID restrictions in January 2023.

"Instead, the recovery has been modest with no clear visibility on sustained recovery," SEEK said in today's announcement.

"In terms of employment markets, blue-collar employment has performed considerably better than the white-collar market in which Zhaopin primarily operates.

"Competition in the white-collar market has intensified in this period of lower than anticipated volumes."

Zhaopin's revenue has declined as a result of these factors, as have revenue and cash flow forecasts in the near to medium term.

"Following the impairment, SEEK’s carrying value of the equity accounted investment in Zhaopin will be $433 million and the net proceeds outstanding will be $75 million," the company said.

"SEEK’s Adjusted NPAT will be impacted by a lower share of earnings from Zhaopin during the period of approximately $5 million relative to FY2023."

SEEK shares are down nearly 3 per cent at the time of writing at $19.93, and have lost more than a quarter of their value since the start of 2024.