Help wanted as Australian jobs portal Seek hits trade turmoil

SYDNEY: The world’s largest listed job classifieds website, Seek Ltd, wrote down nearly half the value of its Brazilian and Mexican sites and forecast an earnings slowdown as trade and political uncertainty stalled growth in both markets.

The move illustrates how a deep recession in Brazil and trade turmoil on both banks of the Rio Grande have stifled the sort of rapid growth the Australian-listed firm hoped for when it earmarked the region for expansion three years ago.

It also underscores how fallout from a global shift toward protectionism has compound- ed economic problems in trade-dependent emerging markets.

Seek said its revenue and outlook soured in both Mexico and Brazil, which together comprised almost 16% of the A$7bil company’s first-half revenue. Things would likely get worse before they get better, it added.

Impairments totaled A$178mil (US$132mil) on investments previously valued at A$335mil. Core earnings were forecast to rise 5% to 8% in the year to June 2019, slower than the 15% the company said it expected to report for the previous financial year.

Seek shares dropped 9% to a three-month low as the broader market edged higher.

David Pace, portfolio manager at Seek shareholder Greencape Capital, said that while the company’s expansion plans could now take longer to bear fruit than expected, it was no reason to pull out of Latin America.

“They are far too long-term focused and rational to be making decisions like that about highly prospective, perhaps now very long-term market opportunities,” he told Reuters.

Seek doubled its shares in leading job search websites in Mexico and Brazil in 2015 and 2016, as economic activity in the region started to decline.

Brazil’s central bank in June slashed its growth forecast for 2018 gross domestic product, while Mexico’s economy shrank in the second quarter amid uncertainty over the future of the North American Free Trade Agreement.

The long “lame-duck” period before Mexican President-elect Andres Manuel Lopez Obrador’s inauguration in December was further dampening activity, Seek’s chief executive for Asia-Pacific and Americas, Michael Ilczynski, told investors on a call.