Seek shares fall 9 per cent after $178m write-down
Seek's share price plunged on Monday morning on the back of a $178 million write-down across the job classifieds site's Brazilian and Mexican assets due to political uncertainty abroad.
The stock was down 9.03 per cent to $19.94 by 11.15am after chief executive Andrew Bassat warned of a "disappointing" performance from Brasil Online and Mexico's OCC, resulting in $119 million and $59 million impairment charges respectively.
"Performance has been disappointing but we remain committed to these markets," Mr Bassat said in a statement.
The impairments are not expected to impact on the fiscal 2018 dividend.
Mr Bassat said reported net profit after tax for 2018 would still be at the top of guidance, at around $230 million, before deducting $30 million for investments in the early stages of growth. Revenue was up 24 per cent for 2017-18, while earnings (before interest, tax, depreciation and amortisation) increased 15 per cent.
“Despite our issues in Latin America, the Seek Group delivered a strong underlying fiscal 2018 result," Mr Bassat said. "We are particularly pleased with the results from SEEK ANZ, Zhaopin and SEEK Asia."
A non-cash fair value gain of $59 million - $36 million for Seek - is expected for the Zhaopin brand due to an investment in Chinese professional networking-focused and careers site Maimai.
On an analysts' call on Monday morning, Seek chief executive of Asia Pacific and Americas Michael Ilczynski pointed to a "slowdown in general economic activity" in Mexico, noting it was the result of ongoing uncertainty in the country's relationship with the United States.
Mr Bassat said he was "not obviously pleased with the news we've had to announce" but did think "the business is in good shape".
A note to investors from Macquarie Wealth Management analysts said the outlook remained positive for revenue, driven by growth in the Seek Australia and New Zealand and Seek Asia and Zhaopin brands.
"This is a combination of execution on growth strategies, and also supported by a robust macro backdrop," the note said.
However, while Macquarie was "supportive of the overall strategy and structure opportunity ... given implied fiscal 2019 downgrades, and the lack of clarity over when earnings leverage might come to reward shareholders for ongoing investment, valuation concerns are likely to remain".