oOh!media reports revenue steady, but profit down for full year

oOh!media has released its financial results for the year ended 31 December 2019.

Highlights

• Revenue increased to $649.6 million (up 1% on prior year)
• Commute business continues to deliver strong contribution; revenue growth of 5% (ahead of the broader out of home market)
• Underlying net profit after tax (NPAT) $37.9 million (down 23% on prior year)

FY19 results commentary

Chief executive officer Brendon Cook said while the media market was challenging in 2019, oOh! delivered revenue growth in line with the broader Out Of Home (OOH) market, maintained market share in both Australia/New Zealand and continued its successful integration of the Commute business.

“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.

“Following the difficult second and third quarters, we delivered a stronger performance and recovered share in the fourth quarter to deliver revenue growth in line with the OOH market and earnings within our guidance range.

“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.

“We remained disciplined on operating and capital expenditure to ensure the company is appropriately positioned to manage through the short term challenging environment while continuing our investment in people, data and systems to deliver sustainable revenue and earnings growth over the medium to longer term.

“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.”

Product highlights:

• Commute continued to grow revenues greater than the broader OOH sector, up 5% on a pro forma basis. The rail assets benefitted from the Melbourne / Sydney package offering subsequent to the Metro Trains Melbourne contract win effective April 2018 which generated the strong first half growth.
• Road revenue declined by 5% for the full year. The first half was impacted by the Federal election in May which caused a reduction in big-brand advertising while the third quarter was adversely impacted by the weaker macro environment and unprecedented reduction in advertising spend. However, an improvement in bookings in the fourth quarter resulted in positive pacing for that quarter with the second half pacing down by 2% versus 9% in the first half.
• Retail revenue grew by 5%, consistent with the improved performance from the prior year despite a challenging retail environment.
• Fly revenue declined by 3% and was impacted by the reversion of the Sydney Airport Qantas Terminal to the Sydney Airport Corporation Limited, after growing by 12% in the first half following the introduction of In Flight in the latter half of 2018.
• Locate by oOh! grew revenues by 3% for the full year.

Outlook and guidance for FY20

oOh! expects the out of home sector to continue to gain market share across media formats in FY20. The company takes the opportunity to provide guidance for the year ending 31 December 2020 of an underlying EBITDA pre AASB16 range of $140 million – $155 million. The Company continues its disciplined approach to capital expenditure with a forecast capital expenditure range of $60 million - $70 million for FY20.