AUSTRALIA’S internet job classifieds leader Seek said yesterday the fall-off in employment ads in 2008-09 had not been as pronounced as expected, prompting a re-rating of the company that triggered a substantial rally in its shares.
Seek’s shares yesterday rose 71c, or 15 per cent, to $5.35 on their biggest single day of volumes since May. The rise pushed Seek’s share price to its highest level in almost a year.
The company had reported a 28 per cent fall in bottom-line net profit to $55.3 million for the year to June 30.
But earnings before interest, tax, depreciation and amortisation fell 11 per cent to $97.8m: a figure well above most analysts’ expectations of $90m-$93m. Joint chief executive Andrew Bassat said online job ads had held up better than Seek had anticipated. “The employment business is meant to be the most cyclical, but it’s even more resilient than we expected,” he said.
EBITDA for the online job ads business was down 15 per cent, while revenue for the division was down 11 per cent. “Given the employment classifieds component of the Fairfax Media result (on Monday), I think you would have expected a bigger fall in our EBITDA from employment than 15 per cent,” he said.
Mr Bassat said he believed the ongoing structural change in the media sector — particularly the migration of job ads from print to online — was benefiting Seek as the market leader.
“What is probably happening to us is that structural issues most benefit the No1 player,” Mr Bassat said. “People stop advertising in three or four places, and start advertising in one place.”
Earlier, on an analysts call, fellow joint chief executive Paul Bassat said Seek had been particularly “pleased with our performance over the last four months”.
Andrew Bassat told The Australian: “Until a couple of months ago, all media companies were reporting significant month-on-month revenue declines. In the last couple of months, those declines have flattened off.”
But he warned investors not to expect the outlook for job ads to improve quickly. “While we’ve seen a flattening off of ad volume declines, there are all sorts of people who will tell you it’s a false dawn. It’s best for us to be prepared for the market to be ugly. It’s a more prudent way to run our organisation.”
Yesterday’s share price rise came despite Seek more than halving its final dividend to 4.7c, against 9.9c in 2007-08.
By Nick Tabakoff
August 26, 2009
source: theaustralian.news.com.au