Profit drops 23% at Ooh Media, but revenues hold strong despite ‘challenging media market’

After reporting a 94.4% slide in profits for the first six months of the 2019, outdoor advertising business Ooh Media has seen a slight improvement for the full year, thanks largely to a strong fourth quarter, reporting a revenue increase of 1% to $649.6m.

Underlying net profit after tax (NPAT) fell 23% on the prior year, down to $37.9m, while earnings before interest, tax, depreciation, and amortisation (EBITDA) dropped 5% to $139.0m – inside the revised forecast the business delivered in 2019.

Outgoing CEO Brendon Cook said Ooh Media’s performance was in line with the broader out-of-home (OOH) industry, with a maintained market share in both Australia and New Zealand.

“In a tough year for media, the overall market declined by an estimated 5%, however OOH continued to out-perform the broader market and grew by 1% in Australia,” said Cook.

Ooh Media reported revenue growth but profit decline for 2019 [Click to enlarge]

“We continued to successfully integrate Commute into the wider business. Commute revenue grew ahead of the OOH market and we delivered our target of $16m in run rate synergies for the year.

“Commute is now our largest division by revenue and its strong performance in FY19 demonstrates its significant contribution to enhancing our diversified asset portfolio and supporting our acquisition business case.

Commute is the new name for street furniture business Adshel which was acquired by Ooh Media in 2018. The business saw revenues increase 13% for the first half of 2019. Revenue growth for the year was 5%.

Commute is now the biggest sector of Ooh Media’s business and saw the best performance [Click to enlarge]

Cook said the business had done a lot to reduce its operating and expenditure costs, to ensure it can manage the “short-term challenging environment”.

“Despite a difficult media market, the fundamentals for OOH remain positive. The sector continues to benefit from structural changes in the media market including the ability to make ‘one to many’ advertising geographically and contextually relevant, further enabled by data and digitisation.”

Revenue across Ooh Media’s business arms

A fully franked final dividend of 7.5c per share was declared for the results.

Road revenue declined by 5%, with Ooh Media attributing the fall to the Federal election which reduced big-brand advertising, but improved bookings in the fourth quarter helped the sector. Retail grew by 5% and Fly declined by 3%, impacted by the reversion of the Sydney Airport Qantas Terminal to the Sydney Airport Corporation Limited.

For the year, net debt reduced from $372.5m to $354.5m. Expenditure was $56.5m.

For the upcoming year, Ooh Media is predicting the OOH sector will gain market share against other media formats. A guidance of $140 – $155m in underlying EBITDA was provided for the year ending 31 December, 2020. The company’s overall strategy is to deliver long-term sustainable revenue and earnings growth, it said.


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