SEEK shares have slumped 11 per cent to an 18 month low after the online job ads business failed to meet lofty profit growth expectations.
The company lifted its underlying profit six per cent to $189 million in the year to June 30, but that wasn’t enough to satisfy investors.
The company’s shares, which had been trading at more than 25 times their expected earnings heading into the latest result, dropped $1.51 to $12.27, their lowest level since February 2014.
Chief executive Andrew Bassat believes short sighted investors are to blame.
“We could have delivered $200 million and invested $10 million less and our share price would have gone up. We would have been a weaker business with a higher share price,” Mr Bassat told AAP.
“The market is way too focused on short term profitability, which is the enemy of investing enough to secure your long term future.”
SEEK completed the acquisition of JobStreet in South East Asia in February and Mr Bassat said the company would continue to target long term growth through investment in new and existing businesses.
It has flagged a roughly five per cent increase in underlying profit to $200 million in 2015/16.
SEEK’s net profit for the year was up 44 per cent to $281 million, due in part of a $100 million revaluation of its JobStreet subsidiary.
Its core Australian business achieved a six per cent rise in earnings, while earnings from its international business were up 34 per cent.
SEEK’s education division recorded an eight per cent earnings slide.
SEEK’S PROFIT GROWTH MISSES THE MARK
* Net profit up 44pct to $281m
* Sales revenue up 20pct to $858m
* Fully franked final dividend up one cent to 17 cents