Seek earnings fall on soft ads and says jobs market is balanced between employers and workers

Online jobs company Seek says workers and employers need to adjust their thinking after it cut its earnings on a dive in job ads.

Online employment company Seek has downgraded its outlook for the fiscal year and lowered its interim dividend as employers pull back on hiring amid a slowdown in the economy.

Seek said job ad volumes had plunged by nearly 20 per cent in the 12 months to January, from record highs to pre-pandemic levels, meaning workers who had bargaining power after the pandemic were now having to compete against a rising number of other applicants for positions.

Seek expects the labour market to continue to deteriorate for the remainder of the financial year. It said job ad volumes were softer than usual in November and December.

This has prompted Seek to lower expected profit for the 2024 financial year to $190m-$220m, compared to the $220m-$260m it had reaffirmed to investors in November, while revenue forecasts were cut from $1.18bn-$1.26bn to $1.15bn- $1.21bn.

Seek chief executive Ian Narev described the labour market as firmly balanced between employers and employees.

“Wages are still growing at just over 4 per cent which also suggests it is still reasonably good for the employee,” he said.

After the pandemic employers found it hard to secure enough workers, but Mr Narev said the shift to a balanced market meant both job seekers and employers had to adjust their thinking.

“Most of us can’t remember the world before 2020 anymore. When you come back to a more balanced market on both sides then there is a bit of adjusting that needs to happen,” he said.

“It’s competitive enough that recruiters need to be very thoughtful about the terms they’re offering, the way they’re advertising, etc.”

Mr Narev said that with unemployment set to increase gradually this year as interest rates and inflation work their way through the economy, many Australians were keeping their options open for a better paying job, but not on the scale seen ­previously.

“Job ad volumes depend on the supply of new jobs as the economy is growing. But the other thing that really underpins our business is the speed at which people are changing jobs,” he said.

“After the wave of people changing jobs after Covid-19 you would expect there would be a period where it is more settled, which I think we are at right now.”

Shares in the company closed 4.4 per cent at $25.65 after being down by more than 10 per cent at one stage in Tuesday’s session.

Adjusted profit from continuing operations slid 24 per cent to $107.5m compared to $117m expected by markets, while revenue was $597m compared to $614m.

Mr Narev said that despite lower earnings, there were still plenty of positives from the half, including double-digit yield growth, budget control and delivering its Platform Unification project ahead of time and within budget. “When your headlines go backwards, you can never classify it as a terrific result. But when you look at the things that we can control then it seems to have gone pretty well.”

Barrenjoey analyst Eric Choi said that it was a good result.

“Seek’s guidance was cut primarily on weaker Australia/New Zealand and Asia volumes, costs only moderated a touch, which leads to EBITDA downgrades,” he said. “If we look at the three key drivers of the downgrade, only volumes (the cyclical element) are weaker, but the two (more structural) elements that Seek can control – yield and costs – are actually better,” he said.

Seek declared an interim dividend of 19c per share, compared to 24c a year ago.