SEEK’s Share Price Rockets on Fat Profits

Australian employment data for February was announced only a week ago. The unemployment rate increased from 5.8% to 6%. Normally, this would be bad news. If more people are unemployed, then spending decreases and the Australian economy suffers.

Yet this is not bad news if your business is based on people looking for work. The job site SEEK [ASX:SEK] managed to increase reported NPAT by 50%, to $275.1 million. SEEK CEO, Andrew Bassat, said:

SEEK has achieved strong half year results while maintaining a focus on re-investment and operating in subdued macro conditions.

SEEK’s Australian and New Zealand revenues grew by 15%, while EBITDA climbed 18% over the prior corresponding year. SEEK has a clear strong hold on the market with 33% of all ad placements. This is eight times higher than the nearest competitor.

And internationally it posted even more impressive figures. Revenue growth increase by 34% and ‘in volatile macro conditions, the International division achieved EBITDA growth of 36%,’ Bassat said. He continues:

The outlook is exciting as we operate market leaders in high growth markets across 14 countries. The markets are also exposed to favourable long-term structural trends.

SEEK was also successful in floating IDP, their education business. It realised gross proceeds of $332 million from the IDP IPO. The sale represented a ninefold cash return on original investment, which can be boiled down to one word — successful.

SEEK’s result announcement saw their share price soar. It’s one of the biggest gainers on the ASX 200 today. Shares were up more than 10% this morning, trading at a high of $14.70 per share.

Seek share price

Source: Yahoo Finance

What’s next for SEEK

SEEK is Australia’s most favoured job site. But SEEK are planning to position themselves in internationally growing markets. ‘We are uniquely positioned to capture large market opportunities across the human capital management industry. SEEK’s strong market position combined with our rich data and insights means we are well positioned to develop new products and services that deliver significant value,’ Bassat said.

Yearly revenue growth for FY16 is expected to be in the range of 15–18%, with EBITDA in the 5–8% range. The year ahead is definitely looking bright for SEEK. First-half FY16 dividends grew by 11% compared to prior corresponding year. And if SEEK can continue to exceed targets, dividends might have no other choice but to go up.

Härje Ronngard,

Junior Analyst, Money Morning

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