Seek just flagged an asset write-down, and its shares are slumping

Seek CEO Andrew Bassat.
  • Shares in Seek fell by almost 10% in early trade after it announced a $178 million write-down on investments in Brazil and Mexico.
  • The company said political uncertainty and a tough competitive environment was weighing on the outlook in those jurisdictions.
  • Elsewhere, Seek said net profit after tax for the 2018 financial year would be at the upper end of previous guidance.

Shares in the jobs website Seek are sharply lower this morning, after the company announced a $140 million write-down on its foreign operations.

The company’s stock price fell by more than 9% in early trade.

In an update for the ASX, Seek said it would book a non-cash impairment on subsidiary entities in Brazil and Mexico, ahead of its full-year results for the 2018 financial year.

The write-downs were summarised as follows:

  • A $119 million impairment for Brasil Online, due to a “deterioration in economic and political conditions” in Brazil.; and
  • A $59 million writedown for OCC in Mexico. Seek cited competitive pressures and the need for further captial investment, which have “impacted the outlook for further cash-flows”.

Those amounts were slightly offset by the recognition of a $59 million non-cash fair value gain on Seek’s investment in the Chinese jobs and networking platform, Maimai.

“It is unfortunate that we have had to reduce the carrying value of Brasil Online and OCC,” said Seek CEO Andrew Bassat.

“Performance has been disappointing but we remain committed to these markets. We are hopeful a greater strategic focus, and an improving economy can over time assist in turning around performance.”

Elsewhere, the company announced preliminary unaudited results that were at the upper end of previous guidance.

Seek flagged revenue growth of 24% for the 2018 financial year (guidance range of 20-25%) and said net profit would amount to around $230 million (guidance of $225-230 million).

Seek (SEK) share price, Monday August 6, 2018. (Commsec)

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