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The financial health of Monster Worldwide, the owner of Monster sites in North America, Europe and Asia, deteriorated further in FY2014 from FY2013. But, if it wasn’t for a massive goodwill writedown (forced onto the company by a shrinking market capitalization) and weaker euro, the report card would have looked very different.

Add the fact that the growth strategy unveiled in May last year is slowly but surely getting traction (if only in the core market of North America), and the news that another cost-cutting round will be implemented, and it becomes clear why the Monster share price has risen 13 percent so far this year in the face of a weakening financial position.Monster_Logo_Flagge

The total revenue of Monster Worldwide dropped 4.5 percent in FY2014 from FY2013 ($770 million U.S. from $808 million U.S.). The operating profit margin (what is left over of revenue after variable costs, such as wages) dropped to 6.8 percent from ten percent in FY2013 and the EBITDA margin dropped to 13.1 percent from 17.4 percent in FY2013.

Still, market observers are bullish. This is how the analysts at Zacks.com interpreted the situation earlier this week: “Monster’s core business is showing signs of improvement and robust potential for cashflow generation. Additionally, the company’s corporate restructuring initiative is expected to boost margins, going forward.

“Mobile has been the primary area of focus for the company for some time, and the increasing penetration of smartphones is a major positive going forward. However, the company continues to face significant competition from professional and social networking sites, such as Facebook, and traditional advertising companies, such as Omnicom Group.”

The worrying part of the Monster story is the fact that Monster International (the operations outside North America), is underperforming immensely – and getting worse. This division contributed 35 percent of total revenue in FY2014, down from 36 percent in FY2013. But, it contributed almost nothing to the bottom line.TalentBin_by_Monster_Logo

In FY2014 Monster International (operations in Europe and Asia) made an operating loss of $16 million U.S., down from an operating loss of $5 million U.S. in FY2013. Some of this may have to do with the euro; some with the fact that places such as Austria only rolled out new products, including Twitter Cards, recruiter mini sites and global talent search engine TalentBin, recently.

The division International scraped together an EBITDA margin of 1.2 percent in FY2014 from 6.2 percent in FY2013. Compare that to the division North America’s EBITDA margin of 25 percent in FY2014, and Monster Worldwide could justifiably wonder whether it shouldn’t simply draw a line through the “worldwide” part of its operation.

The bottom line is, after all, what it’s about.

Christo Volschenk