Seek posts record profit, shares tank

CEO Andrew Bassat

Shares in jobs website Seek were sold down heavily despite posting a record full year profit up 6% to $189.8 million.

The result was better than analyst forecasts of about $188.7 million and revenue was up 20% to $858.4 million.

However, CMC Markets chief market strategist Michael McCarthy says the growth guidance for 2016 isn’t good at 5%.

“Companies trading on 25 x PE (price earning) multiples need to deliver at rates much higher than Seek has reported and forecast today,” McCarthy says.

A short time ago, Seek’s shares price was down more than 11% to $12.23.

The company is forecasting underlying profit in 2016 of $200 million, which is a rise of 5.3%. EBITDA is expected to increase by between 5% and 8%. Revenue growth is forecast between 15% and 18%.

Seek learning results were below expectations. EBITDA (Earnings before Interest, Depreciation, Tax and Amortisation) declined 8% to $72.9 million on the back of issues with TAFE NSW and market competition.

Chris Weston at IG says the company’s re-investment plans in 2016 will leave financial performance stagnant over two years.

“All up, despite being able to boast mid- to high-teens revenue growth, Seek will see material margin compression given the investment in new products on the domestic front and customer acquisition and adjacencies in some International markets,” Weston says.

CEO Andrew Bassat says the company is uniquely positioned to capture large market opportunities.

“The combination of SEEK’s strong market position in high growth markets and the rich data we capture across jobseekers, hirers and students means we are uniquely positioned to develop new products and services that deliver significant value,” he says.

A dividend of 17 cents a share was declared.

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