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Results: Nine shares rise on 25% earnings growth

The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price has jumped 8.14% today after the entertainment company released its results for the 2019 financial year (FY19) to the ASX this morning.

What were Nine’s numbers like?

There was a lot for investors to like in Nine’s FY19 numbers. Here is a summary (which includes contributions from Nine’s Fairfax media acquisition).

  • Revenue of $1.848 billion – a rise of 40% over FY18’s $1.318 billion
  • Group earnings (EBITDA) of $349.9 million – a rise of 36% over FY18’s $257.2 million
  • Earnings (EBIT) of $276.2 million – a rise of 25% over FY18’s $257.2 million
  • Group net profit after tax (NPAT) of $187.1 million – a rise of 19% over FY18’s $156.7 million
  • Statutory net profit of $216.6 million – a rise of 3% over FY18’s $209.7 million
  • Basic earnings per share of 13.1 cents – a fall of 28% over FY18’s 18 cents
  • Final dividend of 5 cents per share – making total dividends per share for FY19 at 10 cents (fully franked) – an increase of 11% over FY18’s 9 cents

Broadcasting (Television and Radio) made up 52% of gross revenue, while Digital and Publishing came in at 27%. Nine’s stake in Domain Holdings Australia Ltd (ASX: DHG) made up 14% of revenue and the Stan streaming platform made up 6.7%.

NEC’s standout performers included 9NOW, with revenue growth of 51% and a free-to-air (FTA) video on demand market share of 49%, as well as the Stan platform, with 1.77 million active subscribers and revenue growth of 62%. Nine reports that H219 is Stan’s first half of positive earnings.

Outlook for Nine Entertainment

Nine expects revenue and earnings continuing to be driven by growth in Broadcasting’s 9NOW platform, Stan and (to a lesser extent) the stake in Domain. The company notes that FTA market conditions remain weak but is predicting a slight rise in Q2 of 2020. A notable rise in costs associated with sporting rights (particularly the Ashes and the Cricket World Cup) is leading Nine to assume FTA expenses to rise by 4% in FY20.

In total, Nine expects group earnings (EBITDA) to grow by “around 10%” for FY20, as well as a repeat of the fully franked 10 cents per share dividend.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings Limited. 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 Scott Phillips.

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