Ooh Media’s profit slides over 90% in ‘challenging’ media market
Outdoor advertising giant Ooh Media – which also owns publisher Junkee and last year bought street furniture business Adshel – has revealed its profit slid 94.4% for the six months to 30 June, 2019. Profit was down to $515,000 for the six months to 30 June, 2019, from the $9.273m it posted the year before.
The directors of the company said its underlying results better reflected the company’s performance. Ooh Media’s underlying net profit after tax (NPAT) was $9.0m, down 24% on the year prior.
Ooh Media’s financials for the six months to 30 June, 2019 (Click to enlarge)
The underlying results exclude some costs and non-operating items, such as those related to the acquisition of Adshel.
Its total comprehensive loss for the period, including effective portion of changes in fair value of cash flow hedges net of tax, was $6.664m, down from a profit of $9.225m for the same period last year.
Statutory revenue was up 58.8% – from $192.027m to $304.863m – and statutory earnings before interest, tax, depreciation and amortisation (EBITDA) was up 271.4% to $134.919m. Underlying EBITDA was $141.863m, up 274.2%.
On a pro-forma basis – which includes the company formerly known as Adshel’s performance for the first half of 2018 to enable comparison – total revenue was up 5% to $304.9m for the half year.
Adshel, now known as Commute under Ooh’s ownership, saw revenues climb 13% to $111.5m. The company said Commute had largely overcome the loss of the lucrative Yarra Trams contract, through asset roll outs across the Public Transport bus contract and Metro Trains Melbourne.
Fly was up 13% to revenue of $32.9m, and locate was up 10% to $23.1m. Retail too, climbed 6% to $61.6m. In February, Ooh Media renewed its Brisbane Airport contract, however, last year it lost control of Sydney’s T3 Domestic terminal to rival APN Outdoor (which is now owned by JC Decaux).
Road, however, was hit, falling 9% to $67.5m. A combination of factors hit the business’ important segment.
Ooh Media’s results by business segment (Click to enlarge)
“This format is typically driven by big brand-based advertising and was adversely affected by soft media spend and the cautious marketing behaviour of major advertisers during the federal election,” Ooh Media’s annual report said.
“1H19 also cycles against a very strong 1H18 which saw significant advertising expenditure by banks and auto companies, which has not repeated so far this year.”
‘Other revenue’, which includes the contribution from Junkee Media and Cactus Imaging, was down 11% to $8.2m.
Regardless of which set of results are under the microscope, Ooh Media said the first half of the 2019 calendar year was challenging, and highlighted the importance of diversification.
“The diversity and scale of Ooh’s multi-platform portfolio delivered a solid performance in the half, despite external conditions,” CEO Brendon Cook said.
“The top-line performance was impacted by subdued trading during the May federal election, and the accompanying softer macroeconomic environment. This negatively affected the performance of Road in particular. Our gross profit was also impacted by the product mix.”
Despite the challenges, medium-term prospects are positive, said Cook.
Cook: We delivered a strong performance despite tough conditions
“The team remains fully focused on the disciplined execution of our strategy to build a data-centric, scalable, multi-format out-of-home business,” he said. “Advertisers continue to increasingly preference out of home as a key category for media spending, supporting Ooh’s medium-term growth prospects in this sector.
“We continue to lead the industry in creating a new media business, and we are best placed to help drive the out-of-home industry’s share of overall media spend from 6% to 10%.”
Ooh Media’s full financial performance (Click to enlarge)
The company’s net debt now stands at $393.4m, up from $372.5m at during the 2018 financial year.
It said it is on track for an exit run-rate of $16m in cost synergies from the Adshel integration for the 2019 financial year, with more to come in 2020.
Ahead of today’s results release, Ooh Media revised its outlook for the full 2019 calendar year. Guidance for underlying EBITDA had been between $152m and $162m. This was then brought down to between $125m and $135m.
The downgrade is backed by the belief the significant and broad-based declines in Q3 bookings will not be sufficiently offset by improved bookings in Q4.
“This has been a disappointing outcome for us and, from the available data and commentary from other media participants, we believe this to be a temporary but significant event driven predominantly by weaker media conditions,” Cook said.
“While the recent adjustment to our earnings forecast for the year due to current market conditions is disappointing, the company has tested a number of potential scenarios for future trading and has concluded that no equity raising is required, excluding the company’s dividend investment plan. This conclusion is, in part, because of the highly cash generative nature of the business.”
