SEEK posts $111.7m loss as job ad volumes dive

SEEK posts $111.7m loss as job ad volumes dive

SEEK (ASX: SEK) has reported job ads dropped by as much as 65 per cent in Australia and New Zealand in the thick of the pandemic, with the company recording a loss of $111.7 million.

However, despite the dire outlook the company says it has seen a partial recovery in the fourth quarter of the financial year.

The majority of the hit to the company's profits came from a previously announced $198 million non-cash impairment charge relating to its Brasil Online business.

"Our businesses in Brazil and Mexico have been facing challenges for some time and this has been exacerbated by the devastating impact of COVID-19," says SEEK CEO Andrew Bassat.

"It is unfortunate we have had to recognise an impairment charge against these businesses.

"The focus remains on evolving their product and service offerings to deliver more value to candidates and hirers."

Excluding the impairment charge and other significant items, SEEK's reported NPAT was $90.3 million, though this is still significantly down on its FY19 profit of $184.8 million.

Overall the company's revenue performance was resilient despite the circumstances at $1.5 billion for the year, up 3 per cent on FY19.

To mitigate the effects of COVID-19, SEEK says it redeployed cash flows into investments including product and technology.

"A key driver of SEEK's growth has been our philosophy to align all our activities to our purpose and to make long-term decisions. During the pandemic, we have adopted the same philosophy towards key decisions regarding our people, our customers and our capital structure," says Bassat.

"To support our customers, we invested in numerous relief measures. To ensure we have funding flexibility, we managed discretionary costs, increased covenant headroom and issued subordinated debt. These measures have all supported SEEK's long-term shareholder value."

In the ANZ region SEEK says it performed well in the context of the COVID-19 pandemic, seeing just a 12 per cent revenue decline during the financial year.

Early recovery for SEEK is being led by SMEs, with the sector now representing approximately 35 per cent of total ad volume.

SEEK says it expects job ad volumes to gradually recover throughout FY21 in ANZ but remain below FY20 peaks.

If these assumptions play out as SEEK expects the company hopes to record $1.5 billion in revenue during FY21 and a $20 million NPAT.

Despite this optimism the company announced it had cancelled its final dividend for FY20 last week considering the current uncertainty.

"The current macro outlook is highly uncertain," says Bassat.

"Our near-term profits will be impacted by COVID-19 but our focus is on executing and investing for the long-term.

"We are confident our investment and long-term focus is the right approach as SEEK's revenue opportunity remains large and under-penetrated. If we invest and execute well, we can take advantage on improving conditions in the near-term but also a much larger longer-term revenue opportunity."

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