Sometimes You Can’t Win for Losing

Three solid results from leading industrials Ansell, SEEK and Monadelphous yesterday. All lifted sales and earnings and rewarded shareholders after the cuts seen the previous year in the wake of the first wave of Covid and the lockdowns.

But that didn’t wash with investors now jumping at shadows called higher costs and job shortages – some of which are easily explained by the state border closures, lockdowns and continuing infections of Covid Delta, as well as the tight restrictions on our international borders.


Shares in employment services group SEEK traded flat yesterday despite a sharp rise in final dividend for the year to June.

SEEK shares were down half a per cent at $31.33 after reporting a 1% rise in revenue for the year to June to $1.591 billion and a 58% improvement in earnings before one off items of $141 million.

The results looked better if you look at its continuing operations. Revenue from continuing operations rose 17% to $760 million and net profit from continuing operations jumped 68% to $135 million.

This was driven by a strong performance from the company’s core SEEK Australia and New Zealand (ANZ) business. It saw revenue jump 40% to $541 million thanks to a small and medium enterprise (SME)-led recovery in job creation and fulfilment.

SEEK ANZ reported record ad volumes in the second half of the year amid easing COVID-19 restrictions and the rapid growth in the jobs market (which is now being impacted negatively by the latest lockdowns in NSW and Victoria).

The better performance of the core business saw the company declare a fully franked final dividend of 20 cents per share. Combined with the interim SEEK dividend of 20 cents, this brought its full year dividend to 40 cents per share, triple the 13 cents a share offered for 2019-20 due to the negative hits from Covid and the lockdowns a year ago.

It was a bit lower than the 46 cents a share paid in the 2019 financial year which was untouched by Covid and at the end of the great 2016-2019 jobs boom

SEEK was forced to withdraw guidance last year due to COVID, and cancelled its final dividend last August, hence the latest final looks good.

Investors seem to miss a more positive outlook and guidance from the company which now expects 2021-22 EBITDA will be in a range of $425 million to $450 million based on assumptions that revenue will be in the range of $950 million to $1 billion.

It expects net profit to be in the range of $190 million to $200 million.

The past year has in fact been a year of change for the company – it saw a significant sell down of its stake in Zhaopin in China and the split of its investments venture from its core job ads business under company founder Andrew Bassat.

SEEK shares hit a record high of $34.15 last month. They were 0.6% lower this afternoon at $31.30. They should have been higher, especially given how resilient the company’s core business here in Australia has proven.


Even though Ansell – which, along with Sonic Healthcare is one of the biggest listed beneficiaries of the pandemic – responded well with a sharp rise in sales, profits and dividends in the year to June 30, investors ignored all that and knocked the shares down more than 12% at one stage.

While Sonic saw revenue, earnings and payments to shareholders surge on the boom in tests and revenues that flow from those 30 million procedures around the world in the year to June, Ansell has also seen sales, profits and returns to shareholders surge from protecting as many people as possible from getting Covid and its variants.

Ansell reported sales of $US2.027 billion, up 25.6%; a 330bps growth in earnings before interest and tax profit margin and 59.9% growth in earnings per share (helped by a buyback).

Profit attributable to shareholders jumped 57.5% to $US246.7 million for the year to June.

Final dividend for the year was 43.6 US cents (a 40% payout ratio), taking full year dividend to 76.8 US cents and up 53.6% over 2019-20.

Directors said the higher results were “driven by higher production volumes, pricing/mix benefit and Selling General and administration expenses (SG&A) operating leverage. This was partly offset by elevated labour and freight costs combined with increase in inventory provisions.”

CEO, Magnus Nicolin (who is about to retire) said in Tuesday’s release that “The focus for us this year has been to continue serving our customers and bringing our major capacity expansions into production despite the challenging operating environment.”

“We were able to get 12 new glove lines and several new body protection smart lines live which helped to deliver the results we saw for 2021 financial year and will also support growth for 2022 financial year and beyond.

“In addition to this, we ensured that the business is well positioned for the post COVID-19 environment by continuing to invest in our sales force, customer experience, product innovation and digital capabilities.”

“We will also continue to assess share buybacks from time to time as part of our capital allocation strategy,” chairman John Bevan said in yesterday’s ASX release.

But that wasn’t enough for investors who dropped the shares to a day’s low of $35.96 before they bounced a touch to be down 9.2% at $36.78.

Analysts said the shortfall in earnings from the consensus estimate of $US256 million worried but the real concern was the weak outlook.

The company said that it expects demand for medical PPE to taper off as COVID-19 impacts lessen.

It also warned that disruptions to its factories and suppliers could weigh on costs.

Investors ignored management’s suggestion it had products ready to replace PPE sales and glove sales when Covid cases and demand eased.


Fears about labour shortages and rising wages saw nervy investors sell off shares in Perth-based engineering company Monadelphous Group yesterday.

Investors ignored the higher revenue, earnings and a final dividend to take flight at the commentary about the tight labour and costs situation that has been evident in the mining industry now for most of this year.

Monadelphous Group says closed borders were creating serious problems sourcing skilled labour (WA has the harshest border rules in the country)

Monadelphous saw a 18.3% increase in revenue to $1.95 billion for the year ended to June 30, and a 29% rise in net profit to $47.1 million.

While it topped forecasts for revenue of $1.8 billion, the earnings outcome was under forecasts of $55 million.

That miss might have worried investors, but when combined with the concerns about costs, down went the shares, slumping more than 14% at one stage to a day’s low of $10.03. They ended a rough day at $10.09, still down 14.4%.

A final dividend of 21 cents a share payable took the full year dividend to 45 cents a share fully franked. That was up from 2020’s 35 cents a share ( which was cut because of Covid).

Despite the higher dividend it was the company’s commentary on the labour market situation in WA – especially in the iron ore sector where the company is active, especially with BHP, Rio Tinto and lately, Fortescue Metals.

“The result reflects an increased demand for the Company’s services as the industry recovered from the delays and disruptions experienced during the initial phases of COVID-19, with customers seeking to capitalise on strong commodity prices, especially in the iron ore sector,” directors said.

“With industry activity high, particularly in Western Australia, measures taken by state governments across the country to control the spread of the COVID-19 pandemic, including international and interstate border restrictions, significantly impacted the industry’s ability to source the required levels of skilled labour.

“The resultant shortfall of available skilled resources was unprecedented and resulted in labour cost and productivity pressures across the industry.”

When investors read that, down went the shares.

The company said it had gained approximately $950 million in new contracts and contract extensions across the resources, energy and infrastructure sectors since the beginning of the financial year.

“A large proportion of new work was secured in the iron ore sector, including a significant number of sustaining capital work projects with both BHP and Rio Tinto, as well as a five-year crane services contract with Fortescue Metals Group. Buildtek continued to perform strongly in Chile, securing several new contracts valued at approximately $100 million, and strengthening its position in South America.”

CEO Rob Velletri said that buoyant economic conditions forecast for the resources, energy and infrastructure sectors in coming years are expected to provide the Company with a strong pipeline of opportunities.

“While market conditions are expected to be strong, COVID-19 impacts and the skills labour shortage will continue to be a major challenge for the industry.

“Our attraction and retention initiatives, strategic approach to targeting new work and collaborative working relationships with our customers will become more important than ever”, 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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