The SEEK Limited (ASX: SEK) share price is under pressure on Tuesday following the release of its half year results.
At the time of writing, the job listings giant's shares are down almost 3% to $29.57.
This is a big improvement from very early on when the SEEK share price sank 10% to $27.84.
This decline appears to be related to news that Founder and CEO, Andrew Bassat, will be stepping down from the role at the end of the financial year, rather than its performance during the first half. More on that development is coming up.
What happened in the first half?
For the six months ended 31 December, SEEK reported a 6% decline in total revenue to $819.1 million This was driven largely by weaker revenues from its international businesses due to COVID-19 headwinds.
But thanks largely to a strong performance by its SEEK Investments segment, the company's earnings before interest, tax, depreciation and amortisation (EBITDA) was down just 1% on the prior corresponding period to $245.9 million. Positively, SEEK's EBITDA was up 1% in constant currency.
Finally, on the bottom line, partly due to higher depreciation and amortisation, SEEK reported an 8% decline in net profit after tax to $69.7 million.
No interim dividend was declared by the SEEK Board. However, the Board intends to recommence payment of ordinary dividends with its full year results. This is subject to ongoing improvements in the macroeconomic conditions across its key markets.
Some shareholders may have been hoping for an interim dividend. So this news could also be weighing a touch on the SEEK share price today.
Management commentary
Outgoing CEO Andrew Bassat was pleased with the half year result given the tough trading conditions.
He commented: "We were pleased to deliver a H1 21 result that was broadly in line with H1 20, a period which was unaffected by COVID-19. This result demonstrates the strength of our key businesses and validates the decisions we made during the pandemic in regard to people, customers and re-investment. If the economies in which we operate continue their recovery, you should expect SEEK to perform well."
Zhaopin sell down
Mr Bassat also revealed that the company is looking to sell down its stake in China-based Zhaopin.
He advised that SEEK and other Zhaopin shareholders are in advanced discussions with a consortium looking to acquire an ownership interest in Zhaopin. The transaction will value Zhaopin at ~A$2.2 billion.
The company notes that if the proposed transaction completes, it expects to reduce its stake to ~23.5%. None of the investors will hold a controlling interest.
Management notes that the transaction will allow SEEK to realise a strong financial return, rebalance its portfolio exposure, and create capital management flexibility.
However, it has warned that there is no guarantee that these advanced discussions will result in a transaction.
Outlook
Not even an upgrade to its guidance has been able to stop the SEEK share price from tumbling lower today.
The company advised that it now expects its revenue to be in the order of $1,700 million in FY 2021. It is also forecasting EBITDA of $460 million, up notably from its previous guidance of $404 million.
In fact, Goldman Sachs was tipping SEEK to increase its EBITDA guidance, but only expected an upgrade to $420 million. Had Andrew Bassat not announced his exit today, the SEEK share price would arguably be trading higher today on this upgrade.
Commenting on the remainder of the financial year, Mr Bassat said: "Overall, our H1 21 result and FY21 outlook is better than we expected. This reflects the strength of our key businesses and improving macro conditions in many of our markets. The combination of the momentum in these results, underlying economic recovery and today's announcements bode well for SEEK's long-term outlook."
