SEEK share price edges lower after trading update and impairment charge

The SEEK Limited (ASX:SEK) share price is trading lower today after releasing a comprehensive trading update and revealing expectations for FY 2020…

| More on:
SEEK Share Price

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The SEEK Limited (ASX: SEK) share price is on the move on Monday after the release of a trading update.

At the time of writing the job listings company's shares are down slightly to $21.67.

What did SEEK announce?

This morning SEEK released a further update on how its businesses are performing during the pandemic.

According to the release, the SEEK ANZ and SEEK Asia businesses have experienced a consistent trend of improving weekly billings since their collapse in March and April.

In April SEEK's billing declines for these businesses were in the range of -65% to -70% compared with the prior corresponding period. Whereas in June, the businesses are now observing weekly billing declines in the range of -40% to -50%.

Things are even better in China for its Zhaopin business. In February its billings were 60% lower than management's expectations. Whereas in May, its billings improved to be around 10% behind the prior corresponding period.

Elsewhere, the company notes that its LatAm business has been significantly impacted, but both its OES business and ESV investments are performing well.

What does this mean for its FY 2020 result?

In light of the above, management is expecting revenue of approximately $1,575 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of approximately $410 million in FY 2020.

Though, it has warned that this is an estimate only to keep the market as well informed as possible. It remains subject to audit and could still be impacted by a range of factors including foreign exchange, second wave impacts, macro conditions, and business performance.

On the bottom line, SEEK expects to post a loss after tax on a reported basis. This follows its decision to recognise an aggregate non-cash impairment charge of $190 million to $230 million. This charge relates to its Brasil Online, OCC Mundial, and four non-core minority investments.

These impairments will not have any material impact on SEEK's debt covenants. Nevertheless, SEEK has obtained a temporary increase to key covenant limits in its senior syndicated debt facility and is strengthening its balance sheet with a $175 million senior note offer.

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a very happy start to the trading week for investors today.

Read more »

A gambler at a casino bets a pile of chips on one number
Share Market News

Star share price rebounds from all-time low after another casino ejection

There has been another change among the leadership ranks.

Read more »

Share Market News

Buy these excellent ASX ETFs for your income portfolio in May

If you're an income investor that isn't a fan of stock picking, then exchange-traded funds (ETFs) could be the solution.…

Read more »

Miner looking at a tablet.
Materials Shares

Are Pilbara shares worth buying right now?

Is the current Pilbara stock price low enough for me to buy?

Read more »

Man smiling at a laptop because of a rising share price.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

A businessman keeps calm in the face of inflation
Investing Strategies

Should ASX 200 investors copy the $223 billion Future Fund's sticky inflation strategies?

Facing sticky inflation, ASX 200 investors are eyeing the Future Fund’s shifting strategies.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Betmakers, Brainchip, Core Lithium, and Megaport shares are sinking today

These ASX shares are being sold off on Monday. But why?

Read more »

A fit man sits and prepares to dive into a hole made in frozen ice.
Mergers & Acquisitions

Perpetual shares freeze and thaw as corporate suitor circles

Something rather odd happened with Perpetual shares this morning...

Read more »