Shares in SEEK have dropped 11 per cent in early trade after the online job search firm warned of weaker underlying earnings amid problems within its education division.
Chief executive Andrew Bassat says annual earnings from SEEK Learning would slide by about 60 per cent because of one-off issues related to an IT systems upgrade undertaken by TAFE NSW.
As a result, SEEK expects its underlying net profit for the second half of the financial year will be in line with the $94.1 million made in the first six months.
The problems at SEEK Learning caused major problems with enrolments and many students to withdraw.
“Until recently based on discussions with TAFE NSW, we believed the issues would be resolved and the financial impact mitigated,” Bassat said in a statement on Monday.
“Unfortunately, this has not eventuated.”
Shares in SEEK were down $1.82, or 11 per cent, at $14.68 at 1100 AEST.
SEEK Learning posted earnings before interest, tax, depreciation and amortisation of $79.2 million in 2013/14, on revenues of $240.8 million.
Bassat says the division’s earnings are expected to come in around $31-$33 million this financial year.
He has also flagged that the group’s earnings growth in 2014/15 and next financial year would be moderated by an aggressive re-investment program.
However the group is forecasting solid growth in revenue from the $756.4 million recorded last financial year.
SEEK reported a net profit of $195.6 million in 2013/14, while its underlying result, excluding significant items, was $179.7 million.
Bassat said the group would launch several new products and services next financial year.
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