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Category: Business, Economics and Finance / Company News

Seek and NIB deliver solid profits and increased dividends

Monday, 22 Aug 2016 11:41:41 | Stephen Letts

A computer screen shows the job search website Seek, on October 9, 2014. (ABC News: Nic MacBean)

Online job agency SEEK has seen its full year profit jump 27 per cent to a record $387 million, driven by the sale of its stake in an education business.

However, excluding the $182 million sale of its stake in the IDP joint venture, underlying earnings were up a more modest 3 per cent to $198 million, which was still slightly ahead of analysts' expectations.

Seek chief executive Andrew Bassat said the result was a strong achievement given the "relatively flat macro conditions".

Mr Bassat said the company would continue to aggressively reinvest in technological upgrades and look to more strategic acquisitions to grow the business.

Sales revenue in the Australian and New Zealand business rose 15 per cent to $313 million, its fastest growth in five years.

International sales - which now contribute more than half the Seek group's total revenue - increased by 18 per cent, with a particularly strong contribution from Asia and its Zhaopin investment in China.

However, Seek failed to find a gold medal performance in its operations in Brazil, with sales revenues down 23 per cent and pre-tax earnings down 22 per cent, hit by an Australian dollar appreciating against the local currency and the worst economic downturn in the country for 25 years.

Mr Bassat said Seek was on track to boost earnings again and gave an underlying profit guidance of between $215 million and $220 million for the 2017 financial year.

Full-year dividends rose 11 per cent to 40 cents per share.

At 12:30pm (AEST) Seek had drifted 0.3 per cent lower to $16.48 per share.

NIB delivers record profit on policyholder boost

Health insurance business NIB has seen its full-year profit jump 22 per cent to $121 million on the back solid growth in the number of policyholders.

Underlying profit - excluding one-off gains and losses - was up almost 50 per cent to $132 million, well ahead of market forecasts of a sub-$100 million effort.

Revenues increased 14.3 per cent to $1.9 billion.

NIB chief executive Mark Fitzgibbon described the result as strong, with every part of the business increasing its customer base and improving earnings.

nib generic logo Photo: NIB reported underlying profit up almost 50 per cent to $132 million. (Supplied: nib)

"Our arhi (Australian residents' health insurance) business delivered policyholder growth of 19,501 policies or 3.8 per cent, almost three-times the industry average of 1.3 per cent, which was a solid result given tough market conditions and ferocious competition," Mr Fitzgibbon said.

The market's dominant player, Medibank Private, last week reported its growth had been "below market performance in both the acquisition and lapse of members" and blamed the deterioration on continuing affordability challenges from passing on rising costs to customers.

Medibank's sole driver of customer growth was in its budget "ahm" brand.

Mr Fitzgibbon said the full-year result was greatly assisted by a slow-down in claims inflation.

Gross margins in health insurance expanded to 14.9 per cent, up from 13.3 per cent the previous year.

However, this still lags Medibank's margins which also expanded last year to 16.6 per cent after a heavy program of cost cutting.

NIB increased its full-year dividend payout to 14.75 cents per share, up from 11.5 cents.

Mr Fitzgibbon gave a somewhat sombre outlook, despite predicting that the full-year underlying profit for 2017 was likely to increase to $130-140 million.

"Financial year 2016 will be a hard act to follow and the pressures of competition and premium affordability means pressure on margins," Mr Fitzgibbon warned.

Investors took note and NIB shares tumbled almost 4 per cent to $4.62 at 12:30pm (AEST).

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