In morning trade on Monday the SEEK Limited (ASX: SEK) share price has charged higher.
At the time of writing the job listings giant's shares are up 4% to $15.12.
Why is the SEEK share price charging higher?
The catalyst for this was the release of a COVID-19 update this morning.
The company notes that since its half year results in February, the coronavirus has spread from China and become a global pandemic.
Furthermore, the steps that governments have taken in response to the pandemic have had a material economic impact in all markets in which SEEK operates. This has had a knock-on effect on all of SEEK's businesses.
Management advised that it has derailed the good progress the company was making during the first eight months of FY 2020. For example, its billings for SEEK ANZ and Asia were down 40% for the week ended March 22 and 60% for the week ended March 29.
And while management notes that billings have now stabilised, it doesn't appear confident that they will rebound quickly. As a result, it has prepared an illustrative example of how its full year results might look if billings remain 60% lower for the remainder of the financial year.
Based on this and billing growth from the Zhaopin business, management would expect annual revenue to be $1,600 million and EBITDA to come in at $410 million. Though, it has warned that this is not intended as guidance.
As a comparison, in FY 2019 SEEK achieved revenue of $1,537.3 million and EBITDA of $455 million. Which isn't too bad, all things considered.
Capital management.
In light of these tough trading conditions, the company is implementing a series of measures to prudently manage its cash flow and balance sheet.
This includes substantially reducing discretionary costs, reducing capital outflows, drawing down undrawn debts for additional liquidity, and deferring the payment of its interim dividend until July 23.
And while things look bleak now, SEEK's CEO and co-founder, Andrew Bassat, remains optimistic on the future.
He said: "When the pandemic subsides, as it will, job creation will be at the core of economic recovery. This aligns directly with SEEK's Purpose and we are determined to ensure we have the capabilities to help facilitate the economic recovery process in all of our markets. Despite working from home, our people are working hard and in the last few weeks have continued to roll out new functionality across AP&A. Our ESVs have also adapted quickly with a dual focus on cash preservation and evolving their business models to meet customer needs in this challenging environment."
