Outdoor advertising company oOh!Media has posted its half-yearly results, revealing a profit drop of 24 per cent.
CEO Brendon Cook blamed the profit decrease on a “weaker media market”, May’s federal election, and the company’s recently acquired Adshel asset.
The company’s profit was also dragged down by weaker advertising on roadside billboards, though airport and location advertising was up.
On a pro forma basis, accounting for the $570 million acquisition of Adshel, oOh!media reported a net profit after tax of $9 million, which is down from $12 million for the same period this time last year.
Revenue rose five per cent to $304.9 million for the first half of this year, up from $291 million in the first half last year.
Speaking to B&T, Cook said the results were as expected.
“The results were as anticipated. Where there was some softening was around one of our products, road, which affected our margin.”
He said, however, that ultimately the “business is very cash generative” and stipulated that oOh!Media “do not need to raise capital.”
“Like with any integration you have big cash outflows in the early parts of integration, they’re all non-recurring.”
In terms of the sustainability of the out-of-home sector, Cook is positive about the future.
“If you look around the world, globally out-of-home is benefitting from its audience and the disruption of the traditional way consumers are engaging with products, which is to our benefit. We are also one of the strongest mediums in terms of performing ROI.
“We don’t see any reason why 10 per cent share in the media should change. In fact, all the challenges and changes and opportunities that other mediums are facing over the next few years plays into our ability to be one of the top-three priority mediums for clients to deliver their ROI objectives.”
Today’s half-year results for the outdoor group follows a downgrade to its full-year guidance, which recently sent oOh!Media shares down by more than 40 per cent.
The company previously flagged its full-year underlying earnings to be between $152m to $162m, but downgraded these forecasts to be between $125m to $135m for the year.
The downgrade is due to a belief that significant and broad-based declines in Q3 bookings will not be sufficiently offset by improved Q4 bookings.
“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.”