SEEK’S VALUE SLUMPS $700M
JOBS site Seek has had nearly $700 million wiped off its market value after flagging a sharp slowdown in forecast earnings and revenue growth, as well as higher-than-expected investment costs.
The group will book a $178 million impairment charge against its operations in Brazil and Mexico for 2017/18, saying deteriorating political and economic conditions in those locations are impacting performance.
Chief executive Andrew Bassat said the cut to the book value of the Brazil and Mexico operations was “unfortunate”.
“Performance has been disappointing but we remain committed to these markets,” he said. “A turnaround of Brasil Online and (Mexico) will require more time and better economic conditions.
“The likely short-term outcome is that financial performance will be worse before an expected sustained improvement.”
Morningstar analyst Gareth James said Seek’s trading update, which includes several one-off items and rising investment costs, unnerved investors.
However, Seek’s non-cash impairment charge against the value of its operations in Brazil and Mexico should not have come as a surprise as the difficult trading environment had previously been flagged, Mr James said.
Seek shares were down $2.00, or 9.2 per cent, to $19.91 late yesterday, giving it a market cap of $6.99 billion, down from $7.69 billion on Friday.
Seek has forecast earnings before interest, tax, depreciation and amortisation growth of 5-8 per cent for the year ending June 30, 2019, compared with expected growth of about 15 per cent for 2017/18 – a result at the top end of its guidance range.