Seek Ltd (SEK) is a provider of online employment services in Australia and New Zealand, but it is also expanding its interest globally.

The company's three main divisions are; Seek Employment, which focuses on the online Australian and New Zealand employment, Seek Education, which incorporates Seek Learning and Think Education and Seek International, which includes significant interests in overseas online employment based websites.

The company is the dominant player in the Aussie job ads market. However, with a slowdown in the domestic market, the international and education divisions have become the group's major drivers.

FY13 Results

FY13 net profit surges 128% to $300.1 million, whilst on an underlying basis profit rose 8% from FY12. Revenue soared 40% to $620.2 million, with SEK defying weak domestic employment conditions. Seek Employment revenue was down 5% on FY12. SEK has recognised the structural weakness in the employment market, and the investments it has made in its other divisions are paying off.

The key takeout was the huge performance in Education, which experienced a 94% increase in EBITDA. Seek International experienced revenue growth of 26% and, along with Seek Education, these two divisions now make up over 60% of overall revenue. Operating cash flow rose 20.5% to $241, fully covering EBITDA and allowing SEK to declare a final dividend of 12 cents, up 33% on-year.

Outlook

SEK's FY13 results continue a pattern of strong growth for the company. Over the past 10 years, revenue has risen at a compound annual rate of 36%, with net profit increasing at a 30% rate.

The company has significantly reduced its reliance on employment revenue, with this division now making up less than 40% of the overall business.

In our view, the key growth drivers remain Seek International, and in particular, Seek Education. The current economic weakness indirectly affects demand for education services as people look to upgrade their skills.

The company guided for FY14 net profit to exceed FY13, which we think is easily achievable. Moreover, a continued depreciation in the Aussie dollar, along with a recovery in employment ad volumes is likely to put SEK on track to again exceed market expectations.

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