Nine Entertainment Co Holdings Ltd share price is up 15% on profit growth of 55%

The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price has risen by over 16% today after delivering its half-year report for the six months to 31 December 2017.

Nine Entertainment is the operator of the Channel 9, as well as its sister channels.

Here are some of the highlights compared to the prior corresponding period:

  • Revenue increased by 9% to $719.6 million
  • Group operating earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 51% to $181.3 million
  • Normalised net profit after tax (NPAT) increased by 55% to $116.2 million
  • Statutory NPAT improved to $174.1 million from a $236.9 million loss
  • Normalised earnings per share (EPS) increased by 55% to 13.3 cents
  • Dividend increased by 11% to five cents per share

This seemed like a really strong performance from a company that most people say is in structural decline.

Nine also improved its net debt position to $46.2 million from $177.5 million last year, which reduces the net leverage to 0.2 times from 0.9 times.

A key reason for the good improvement for the half was that Nine managed to take the number one spot for market share in all the key buying demographics according to OzTam.

It attracted a commercial network share of 39.5% of the 25 to 54 bracket. For the primary channel Nine’s share of the 25 of 54 demographic was 40.7%, almost seven points ahead of its nearest competitor.

Nine said that the performances by The Block and Australian Ninja Warrior were highlights and I believe that broadcasting The Ashes was also beneficial for Nine.

The TV company said that reported costs were down around 1%, which is important in the context of fighting for a smaller pool of advertising revenue.


Nine said that its metro revenue was trading around 7% ahead of the same time last year whilst core digital advertising is 15% higher.

During FY18 the metro free to air market is expected to show growth of 1% to 2% according to Nine. The business remains committed to delivering further cost efficiencies in free to air in the coming years. Group EBITDA is expected to be between $237 million and $261 million.

Foolish takeaway

I thought this was a great result for Nine, it showed that it isn’t a dying dinosaur just yet. I’m not sure where it will be in a decade from now, but the next twelve months could be promising.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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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