Loading ...When Kerry Packer sold his 49.6% stake in online classified jobs site SEEK.com.au last week much of the expert commentary remarkably avoided the most obvious explanation, namely that the company’s profits have fallen, and organic growth prospects have all but disappeared.
The simple fact is that the latest financial results for SEEK show sales, profits and dividends were all down last year. And future growth prospects in its core business may be limited because the trend for job classifieds to migrate online is now largely completed.
Paul Bassat, one the of the two Bassat brothers who, with Matthew Rockman, founded the high-profile Melbourne based company, said that 79% of all job ads are now online.
“…[W]e continue to see a sustained migration from print to online, with online now capturing approximately 79% of all job ads” he said.
Even so, SEEK is clearly still the king of the online job classifieds market in Australia, with an estimated 80% market share. The Fairfax owned Mycareer.com.au and News Ltd’s Careerone.com.au, along with a raft of smaller and specialist sites, make up the rest of the Australian market.
But with the migration of job ads online approaching its end, organic growth prospects for all players may be limited.
Indeed, during the last year, the numbers for online job ads went backwards, rather than forwards.
Bassat told the Australian Financial Review earlier this week that online job classified numbers had dropped 50% during the downturn of 2008-9.
No doubt that was the main reason revenues from SEEK’s Australia and New Zealand employment business was down 11% for the year to $168.9million.
SEEK’s market leadership, nevertheless, was unaffected. Nielsen Net Ratings data for July 2009 suggested that Seek attracted a record 3.27million unique browsers during the month, and that nearly eight out of every ten minutes Australians spend searching for jobs online is at Seek.
Bassat said that this market leadership would disproportionately help the company when the job market rebounds.
“When job ad market improve, SEEK should capture a disproportionate share of the rebound in ad revenues.”
Brother Andrew, who is joint CEO, said that SEEK’s other businesses and investments overseas give the company “ä substantial growth platform”.
He was particularly bullish about the company’s investments in education and training businesses, and investments in two Brazilian job sites.
Of course, the fact is that SEEKS online job ads business dwarfs these other businesses in terms of revenue, accounting for nearly 25% of the company’s total revenues for the year.
Moreover, some of these other businesses are a drag on profit rather than contributing.
Zhaopin, the Chinese online jobs site in which SEEK now holds a majority position, continued to lose money last year, even though it reduced the rate of loss in the second half of 2008-9.
In total SEEK booked a loss of $A17.3million for the year on its Zhaopin holding.
SEEK said that the increase was 93% attributable to movements in foreign exchange rates, and to its increased investment in Zhaopin.
For more information go to www.seek.com.au
