Why has the APN Outdoor Group Ltd share price suddenly taken off?

Credit: Oberazzi

What: The share price of outdoor advertising company APN Outdoor Group Ltd (ASX: APO) has leapt around 6% higher on Monday morning after the company (which can now boast a $1 billion market capitalisation) reported full year profit results which pleased investors.

Here’s what APN had to tell shareholders:

  • Revenue up 20% on 2014 to $301 million
  • Pro forma net profit after tax but before amortisation (NPATA) up 83% to $43 million
  • Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) up 62% to $73 million
  • Earnings per share increased from 14.1 cents per share (cps) to 26 cps
  • A fully franked final dividend of 11 cps was declared. APN’s shares will trade ex-dividend on March 9 with payment on April 22
  • Net debt was reduced by $18.6 million to $57.5 million


Amongst the highlights from APN’s results was that the group exceeded all key Prospectus targets including its NPATA figure which was 53% ahead of the Prospectus forecast and that full year dividends totalled 15 cps, well ahead of the 10 cps Prospectus forecast.

APN also reported market share growth in both Australia and New Zealand with the group exceeding its targeted rollout with the completion of 52 large format operational digital screens as at the end of 2015. Major asset upgrades included the completion of digitalisation works at both Auckland and Sydney Airports.

What’s in store for 2016?

With assets spanning the categories of billboards, transit, rail and airport, APN holds a diversified portfolio of appealing assets.

Management has provided guidance for revenue growth of between 8% and 11%, and full year EBITDA in the range of $84 million to $88 million. With the following comment made:

“Demand from advertisers and agencies for our large format digital screens remains strong and as a result, we are planning to accelerate our rollout programme in 2016 to over 20 new digital Elite Screens. To date we have commissioned 2 new Elite Screens in 2016 with a further 9 approved and at various stages of construction.”

The shift to digital is providing a great tailwind not just for APN, but also for competitors such as oOh!Media Ltd (ASX: OML) and QMS Media Ltd (ASX: QMS). Outdoor advertising certainly appears to be a sector set for growth but investors need, as always, to consider whether it is already priced in.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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