Ooh Media swallows bitter NZ pill, posts good revenue gains
Ooh Media has delivered strong half-yearly revenue gains across its major portfolios, but took a one-time profit hit due to losing the high-margin Auckland Transport contract.
The company’s group revenue jumped by 17% for the half-year ending June 30, up to $336.2 million from $288.3 million in the first half of 2024.
Outgoing CEO Cathy O’Connor said during the company’s earnings call that 20% of this revenue growth was attributable to new business, with the remaining 80% due to returning and continuing business.
Ooh’s biggest 3D billboard in Melbourne has just been upgraded
The company took a $30 million hit from the Auckland loss, comprising a $25 impairment in goodwill, and a $5 million impairment to “identifiable intangible assets.” This is an accounting adjustment, and does not represent cash paid by the business.
NZ operations are clearly hard hit, with an ongoing cost reduction of between $6-7 million annually and a one-off restructuring cost of $1 million in the second half of this year.
Ooh Media informed shareholders of the loss in July, saying it had “planned for this eventuality” and saying the contract represented just 4% of its FY24 reported revenue. Tellingly, O’Connor said Ooh Media stretched itself as far as fiscally responsible in an attempt to keep the “high-margin contract”, but were still outbid — hinting QMS may have paid too much to snatch it away.
CFO Chris Roberts also managed to find the silver lining in the NZ loss, noting that more than half of the company’s revenue was now locked up in contracts beyond 2029 and that “importantly, no single contract represents more than 5%” of the company’s overall business.
Broken down by category, Ooh’s “road” billboards made $120.3 million for the half-year, up 19% year-on-year, with its street furniture and rail network earning $108 million – also up 19%, and largely driven by its Sydney Metro contract.
Ooh Media’s retail network was flat, with revenues of $58.6 million creeping up by just $300,000. Growth of 33% in New Zealand was undercut by a 3% fall in the Australian retail market.
Airport revenue was up 43% to $31.8 million, while “city and youth” fell by 3%, which Ooh puts down to “lower advertising interest in the absence of the launch of Move 2.0” — the long-awaited audience measurement system. “We’re progressing with our preparation”, O’Connor said, after being asked for yet another Move update, promising the new system is “going to be a massive uptick for out of home”.
Gross profit of $225.6 million was up 16% year-on-year, with operating expenses of $73.3 million. EBITDA up 23%, to $153 million. The company took a $98.9 million depreciation and amortisation charge, as well as impairment charges from the loss of the Auckland Transport contract, which will taken over by rivals QMS in October.
Elsewhere during the investor call, O’Connor dismissed the concerns of a caller who posited the loss of the Auckland Transport contract might have a knock-on effect on other business in New Zealand. Ooh Media still holds “a strong and dominant position there”, O’Connor told shareholders, due to its strong retail media network.
Further net finance costs of $28.7 million added to the first-half expenses, resulting in the company posting an $11.3 million net loss after tax.
The adjusted underlying net profit of $26.5 million, up 46% year-on-year, paints a far rosier picture for Ooh Media’s shareholders.
The company’s gross margin was down 1.3%, to 41.8%, due to increased rent and staff incentives, but is expected to increased to 44% in the second-half. Third-quarter media revenue is on pace to increase by 5%, bouncing back from a soft July.
Full-year capex is now forecast to be between $53 million and $63 million, with full-year operating costs expected to fall between $159 million and $161 million.
In commenting on the growth of the whole of out of home, O’Connor said it “continues to be the standout in the Australian media sector”, hitting an agency share spend of 16.5% in the first half of the year. See graph above for the growth trend.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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