Australian recruitment giant Seek has deferred its $40 million AUD ($24 million U.S.) interim dividend in a bid to preserve the company’s cash flow and liquidity amid the ongoing Covid-19 crisis.
Seek co-founder and CEO Andrew Bassat said the decision to defer the dividend, which will be paid out in July, was not made lightly.
“The level of uncertainty that is arising from the virus has prompted us to take a prudent approach to managing our cash flow and balance sheet,” he said in a statement to the ASX.
The crisis is impacting Seek in all of its markets, with the company anticipating a 60% reduction in billing.
To support its customers, the company has relaxed some of its contracts, removed the minimum monthly spend and now allows hirers to pay only for job ads they use. The company has also extended the expiration date on pre-purchased advertising packs.
“When the pandemic subsides, as it will, job creation will be at the core of economic recovery,” Bassat said. “This aligns with Seek’s purpose and we are determined to ensure we have the capabilities to help facilitate the economic recovery process in all of our markets.”
The company has also cut costs to further boost liquidity , including freezing all promotions and pay raises and reducing the use of contract labor.
Seek didn’t update its guidance, but based on modeling indicated that revenue for the current financial year would be around $1.6 billion AUD, with EBITDA (earnings before interest, taxes, depreciation and amortization) of around $410 million AUD.
Bassat said that while current economic challenges will impact Seek’s short-term profitability, they will not change the company’s long-term plans.
“Our focus remains on executing against our existing long-term growth strategies and developing new employment and education solutions to meet the needs of our customers in the months and years ahead,” he said. “We expect our long-term focus to unlock large new revenue pools and create significant long-term shareholder value.”