Seek delays dividend due to COVID-19 pandemic

Seek has pulled its earnings guidance and postponed the payment of dividends after the COVID-19 pandemic caused billings to fall by 60 per cent in two weeks.

The employment website said in an ASX statement that the pandemic was having a "material economic impact in all markets" on all of Seek's businesses and that it could no longer reliably provide guidance.

Seek chief executive Andrew Bassat said the COVID-19 pandemic had hurt all parts of his business.Credit:Eamon Gallagher

Revenue for Seek Australia and New Zealand fell by 40 per cent in the week ending March 22, and was down 60 per cent the following week. Billings for China-based subsidiary Zhaopin were 60 per cent lower than expected in the month of February, but improved in March.

As a result, the interim dividend of 13¢ will now be paid on July 23.

"Deferring the dividend was a decision that we did not make lightly. The level of uncertainty arising from the virus has prompted us to take a prudent approach to managing our cashflow and balance sheet," chief executive Andrew Bassat said.

The company said it had not breached existing debt covenants and would draw more money from its debt facilities to manage needs. Seek has also reduced costs and is removing obligations for its customers. Customers on existing 12-month contracts have been relieved of minimum monthly spend obligations until the end of May, while expiry dates on pre-purchased packages have been extended.

"When the pandemic subsides, as it will, job creation will be at the core of economic recovery. This aligns directly with Seek's purpose and we are determined to ensure we have the capabilities to facilitate the economic recovery process in all of our markets," Mr Bassat said.

"The near-term economic challenges will impact SEEK's short-term profitability. They will delay, but not fundamentally change our long-term aspirations. Our focus remains on executing against our existing long-term growth strategies and developing new employment and education solutions to meet the needs of our customers in the months and years ahead."

At its annual general meeting last August Seek forecasted guidance for the 2020 full year of 15-18 per cent revenue growth and an increase of 8-11 per cent in earnings before interest, tax, depreciation and amortisation (EBITDA). Seek’s revenue climbed by 16 per cent for the half year to December, but Mr Bassat said in February that the coronavirus and softer economic conditions meant Seek was not reaching its earnings potential.

Revenue was $1.54 billion in the previous financial year and earnings were $431.2 million. Seek said an example, based on high level assumptions, was that revenue for the full year could be about $1.6 billion, with EBITDA of approximately $410 million.

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