oOh!media’s share price has fallen by more than a quarter after the out-of-home company released a trading update saying that there was a “softening media market.”
The company said that the media market had slowed at the end of Q1 and into Q2 “due to a decline in the broader macroeconomic environment” in Australia and New Zealand.
Despite the company reporting that its Q1 revenues were up three per cent year-over-year, its March performance was “softening significantly” compared to its mid-February pacing. oOh! said that a decline in bookings, particularly from the government, was largely to blame for the poor performance.
Recent figures from the SMI have also shown that declining government spend has hit the Australian ad market particularly hard.
oOh! said that its April revenue was “particularly soft” and was down 10 per cent compared to the previous period. However, the firm reckoned its May and June media revenues would be stronger and are up on the previous period.
The business’ Road and Fly networks were up seven and 88 per cent year-on-year, respectively and the business took market share in three-quarters of the Outdoor Media Association’s categories.
However, oOh! said that its Street category continued to be impacted by the launch of City of Sydney and that it had lost 1.9 per cent in market share in the first quarter of this year.
Brian Han, an analyst at financial firm Morningstar, said the market’s reaction to oOh!’s gloomy outlook was “excessive.”
“It took just a few management remarks about a slowdown in 2023 to date to wipe out the 10% to 15% premium the stock was trading in recent months,” added Han.
“The three per cent group revenue growth in the March quarter was lower than the eight per cent pacing indicated in mid-February. Conditions deteriorated in April (revenue down 10 per cent), and management’s view that the June-quarter growth may still end up positive due to emerging recovery signs is falling on deaf ears. However, revenue recovery was never going to be smooth this year, and the prior-year comparisons are especially tough early this year.”
