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SEEK finds profit growth

SEEK (ASX: SEK) on Wednesday reported its results for financial year 2013. Revenue at the online job advertising company rose strongly by 40% to $620 million, and net profit excluding exceptional items rose 8% to $141 million in the 12 months to 30 June. The rise follows a 35% jump in profits in the 2012 financial year when the Australian job market was significantly stronger.

SEEK CEO Andrew Basset was pleased with the results, achieved despite the challenging local conditions: “This was another record full year result that was achieved despite subdued macro conditions and a reinvestment focus in our international businesses.”

SEEK’s Australian and New Zealand online job website, www.seek.com.au, contributed $234 million, or 40%, of group revenue and 60% of group earnings before interest and tax (EBIT). The result was solid in difficult domestic conditions, and demonstrated SEEK’s dominant position in the industry.

SEEK reported that it currently demands 70% of all online ads and accounts for eight times the amount of placements as its competitors. There is room to grow however, as SEEK only facilitated 26% of all new job placements in Australia in 2012-13, an area it is actively pursuing to drive revenue and profit growth.

SEEK’s international business, through investments in a range of leading online job websites in China, Brazil, Indonesia, Mexico, Malaysia, Singapore, Thailand, Hong Kong and the Philippines, also grew strongly over the past 12 months. Division revenue and earnings grew by 26% and 32% respectively, as SEEK invested further in its Asian business and purchased a 25% stake in One Africa Media to give the company exposure to the high growth African market.

SEEK’s third division, education services, offers educational services to SEEK’s database of job hunters as a way of improving employment prospects. Division revenue and earnings grew by 10% and 76% respectively, and is expected to perform better during cyclical slowdowns in the Australian economy when www.seek.com.au will traditionally struggle.

In an additional benefit to shareholders, SEEK announced an increase in the final dividend of 33%, to 12 cents per share. This brings the yearly total to 22 cents and a yield of 2.3%, fully franked.

Foolish takeaway

Another set of strong results from SEEK has proven its resilience through weaker Australian economic conditions.  The shares have recently come back to around $9.50 after reaching a high of $11.54 in May. The current share price represents an opportunity for investors to gain exposure to around 25% of the global population through SEEKs investment in growing Asian and African markets.

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Motley Fool contributor Andrew Mudie does not own shares in any of the companies mentioned in this article.

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