SEEK share price on watch after COVID-19 profit hit

The SEEK Limited (ASX:SEK) share price will be on watch after revealing how COVID-19 has hit its FY 2020's profits…

| More on:
SEEK Share Price

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The SEEK Limited (ASX: SEK) share price could be on the move on Wednesday after the release of the job listings company's full year results.

How did SEEK perform in FY 2020?

It has been a difficult year for SEEK due to the coronavirus pandemic and its negative impact on listing volumes.

For the 12 months ended 30 June 2020, SEEK delivered a 2.6% increase in revenue to $1,577.4 million. This growth was driven entirely by its SEEK Investments segment, which includes the China-based Zhaopin business. It posted a 15% increase in segment revenue to $947.8 million, which offset an 11% decline in AP&A revenue to $629.6 million. The AP&A segment includes the SEEK ANZ business, which recorded a 12% decline in revenue to $387.2 million in FY 2020.

SEEK's reported earnings before interest, tax, depreciation, and amortisation (EBITDA) came in at $414.9 million, down 9% from $455 million in FY 2019. On this occasion, a 20% increase in SEEK Investments EBITDA to $151.7 million, wasn't enough to offset a 17% decline in AP&A EBITDA to $295 million.

On the bottom line, SEEK's reported net profit after tax (excluding significant items) was down 51% to $90.3 million. Those significant items relate to impairment charges of $198.4 million and funding related costs of $3.6 million. Including these significant items, SEEK recorded a net loss after tax of $111.7 million.

In light of this loss and current economic conditions, no final dividend was declared. Once economic conditions improve, management intends to resume the payment of dividends.

Outlook.

SEEK's CEO and Co-Founder, Andrew Bassat, is cautious on the near term, but remains very positive on SEEK's long term prospects.

He said: "The current macro outlook is highly uncertain. 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."

Due to uncertain market conditions, SEEK is not providing any guidance, but has given investors an idea of what FY 2021 might look like.

This is based on a number of assumptions such as ANZ and Asia job ad volumes recovering during FY 2021 but remaining below FY 2020 peaks. It also assumes gradual improvements in online billings for the Zhaopin business in the first half, before growing in the second half.

Based on this, SEEK has suggested FY 2021 could see revenue of ~$1,470 million, EBITDA of ~$330 million, and a reported net profit after tax of ~$20 million. This represents declines of 6.8%, 20.5%, and 77.85%, respectively, on FY 2020's result.

Mr Bassat commented: "SEEK's short-term results will be negatively impacted by the challenges of COVID-19. Over the longterm, our strategy and overall revenue opportunity remain intact albeit COVID-19 will likely impact the timeframe to achieve our A$5b revenue aspirations. We are confident in our strategy and growth prospects, and as a result we will continue to invest across ANZ, Asia, Zhaopin, OES and ESVs."

"When labour markets return to more normal conditions, we expect to generate a high ROI given our market leadership and track record of generating strong returns from investing in product, technology and data. The near-term will continue to pose challenges, but we will remain agile to take advantage of new growth opportunities as they arise. If we invest and execute well, we expect SEEK to emerge a stronger and better business from this challenging period," he concluded.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A businessman hugs his computer and smiles.
Share Market News

3 ASX ETFs I would buy and hold for a decade

These funds could compound your wealth over the next 10 years.

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

10 ASX shares to buy after the market selloff

Analysts think these shares could be strong buys after recent weakness. Let's see what they are recommending.

Read more »

Unsure man analysing data on laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was carnage on the ASX today.

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Share Market News

ASX 200 plunges as US tariffs fall-out continues

The ASX 200 benchmark index fell by almost 200 points on Friday.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Opinions

ASX shares are on sale! What are you buying?

Stocks are being hit hard. There are opportunities everywhere.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Bell Potter names the best ASX 200 stocks to buy in April

The broker is feeling bullish on these names this month. Let's find out why.

Read more »

woman holding 'hiring' sign in shop
Share Market News

Why is tonight's US jobs report so significant for global markets?

With Liberation Day in the rearview mirror, global equity markets will be looking towards tonight's US jobs data.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX 200 shares rocketing higher in this month's falling market

A handful of ASX 200 shares managed to fly higher this past month. But how?

Read more »