Seek Shares Punished Despite Digher Divie

The ageing of jobs and education search group Seek (SEK), from hot online growth stock, to mature online giant continued yesterday when the market turned its back on what seems to have been a reasonable interim result.

Underlying revenue increased 17% to $395.3 million. Including significant items, Seek delivered a record half-year net profit of $182.8 million.

But according to market forecasts, Seek’s 9% rise in after tax profit to $94.1 million (on an underlying basis) was well short of the $101 million many analysts had been tipping.

So naturally investors took a set against the stock and down it went nearly 9% to $17.10.

Not even a sharp 36% lift in interim dividend (to 19c a share from the first half of 2013-14) was enough to impress the suddenly negative investors.

And even management confidence that Seek can continue to deliver strong profit growth in what is currently a “high” unemployment environment, was not enough to change yesterday’s negative view.

SEK 1Y – Seek misses high expectations

Seek chief executive Andrew Bassat said he expects underlying profit for the second half to be ‘moderately greater‘ than the first half.

Mr Bassat said he did not think the economy was in as bad a shape as headline economic numbers suggested and he was having positive conversations with firms looking to advertise jobs.

In yesterday’s statement, Mr Bassat said the company’s domestic’s financial results reflect the strength of the business model and a continuation of improving operating conditions. He said, "Based on results for January and February 2015, revenue is up compared to the same time last year and we are seeing good forward looking indicators.

"We are also happy with our progress in SEEK’s re-investment in placements which has led to 35+ product enhancements and significantly improved the search and matching process for candidates and hirers.

“SEEK has a strong track record in capital allocation which has historically translated into strong financial results. Our expectation is that the re-investment in the placement strategy and in adjacent career products and services will lead to SEEK delivering more value to candidates and hirers and ultimately SEEK growing its share of placements,” he said.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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