Seek warns weaker Australian job markets will hurt earnings
The online employment group says diving job ad volumes is making it easier for businesses to find staff, but workers are facing more competition as it warns the labour market will worsen this year.
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Seek has warned deteriorating economic conditions in Australia will see businesses produce fewer jobs this financial year after the online employment company swung to a full-year loss.
The ASX-listed company said job ad volumes plunged 20 per cent in the 2024 financial year, 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 chief executive Ian Narev said worker shortages were not an issue in most parts of the economy and described the labour market as robust and more balanced than this time last year.
“The results can look distorted by the boom we saw after Covid, but overall volumes are now only just a tad lower than where it was in 2019,” he said.
“There are opportunities for people looking for jobs … The environment is much healthier and more balanced than it was a year ago, when volumes were a lot higher and businesses were struggling to find people to fill these jobs. The data and qualitative feedback show us that across the economy, companies are finding it easier to find people now. But on the jobseeker side of the market, the unemployment rates are ticking up a little bit, but people are still finding jobs.”
Mr Narev said actual volumes were “trickling steadily” downwards, but it was not as dramatic as the surge in demand following the pandemic. Job ad volumes are expected to decline by low-teen percentages in the coming financial year. The number of visits by candidates to Seek rose 8 per cent in the past 12 months.
The pullback in available jobs has seen a rise in applications per ad. Seek says there are about 175 applications per job posted on its website in Australia, compared to about 50 potential workers per available role in July 2022.
Drew Koch, general manager of steel fabrication business Gant & Sons, said he was having no trouble finding young people who wanted to do apprenticeships but more experienced workers were harder to find.
“It’s still difficult to get skilled people,” he said, noting that business had stabilised since the hectic post-Covid boom.
Financial markets expect labour force data out on Thursday to show the unemployment rate remained unchanged at 4.1 per cent in July, with 25,000 jobs added compared to 50,200 in the prior period.
Shares in the Seek closed 6.6 per cent lower at $20.66 on Tuesday, after being down by as much as 10 per cent. This followed the company’s warning that the broader economic slowdown from inflation and cost of living pressures would affect earnings for a second financial year.
Seek’s outlook is for revenue to be between $1.02bn and $1.14bn, while adjusted net profit would be between $130m and $180m.
The company missed market expectations for the 2024 financial year as sales revenue from total operations fell 17 per cent to $1.16bn, while earnings before interest, taxes, depreciation and amortisation fell 13 per cent to $483.1m. Seek reported a loss of $100.9m, which included a $141m impairment related to its investment in Zhaopin, amid weak conditions in China. That compares to a net profit of around $1.05bn last year.
Jarden analyst Tom Beadle said the miss for the 2024 financial year was disappointing, noting there was material downside for the company in the 2025 financial year.
“The miss was surprising given Seek provided an update to the market on the impairment of Zhaopin in July but did not update guidance. The miss appears to have been driven by macroeconomic forces, and factors in Seek’s control remain positive,” he said.
The past financial year saw Seek complete a multi-year investment in platform unification, which Mr Narev said would allow the company to focus more on improving productivity and innovating in its offerings to employees and employers.
“We’re now at a point where we can go back to the core of what we’re here to do, which is innovate really well for jobseekers and for hirers, and focus on our own productivity,” he said.
“There is a world of opportunity in all our markets, and we just need to keep innovating because we’ve got leading market positions and market leading data. We want to make sure we’re investing consistently through the cycle and tailor that to what is happening in the outside world.”
Mr Narev said Seek was more agile and adaptable with its cost base, highlighting that flat revenue in 2025 would mean flat costs, while higher revenue would see costs increase.
“If revenue does worse than we expect now, then our costs will also be down a bit. We have built a lot of flexibility into our cost base that can be adapted to market conditions,” he said.
Seek will pay a final dividend of 16c a share fully franked, which takes the total dividend for the year to 35c. That’s down nearly 26 per cent from 47c last year.
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