For the full-year to 31 December 2019, oOh! reported that overall revenues increased marginally by 1% on the prior corresponding period (pcp) of FY18 to reach $649.6 million.
The company noted that the integration of its commute business is now on track with $16 million of annualised run rate synergies achieved in FY19. oOh! anticipates that a further $2 million of synergies will be achieved during FY20.
The company further reported that underlying earnings before interest, tax, depreciation and amortisation (EBITDA) dropped by 5% to $139 million. However, this came within the revised guidance range of $138 million to $143 million.
Underlying net profit after tax (NPAT) dropped sharply by 23% to come in at $37.9 million, while the company declared a fully franked final dividend of 7.5 cents per share.
oOh!media segment performance
The company’s Commute business continues to be one of its stronger performers, with revenue growth of 5% performing ahead of the broader Out Of Home market. Additionally, the rail advertising assets within the company’s advertising portfolio benefited from its Melbourne / Sydney package offering during the period.
However, revenue from the Road segment declined by 5% for the full year. The company noted that revenue for the first half of FY19 was impacted by the Federal election last May which caused a reduction in big-brand advertising. In addition, revenues for the third quarter of FY19 were adversely impacted by a weaker macro environment and a sharp reduction in advertising spend. However, pleasingly for shareholders, there was an improvement in bookings in the final fourth quarter.
The company’s Retail revenue grew by 5%, while revenue from its Fly segment declined by 3%. Meanwhile, revenue generated from the Locate by oOh! division lifted by 3% for the full year.
Chief Executive Officer Brendon Cook said while the media market was challenging in 2019, oOh! delivered revenue growth in line with the broader Out Of Home (OOH) market, maintained market share in both Australia and New Zealand, and continued its successful integration of the Commute business.
“Despite a difficult media market, the fundamentals for OOH remain positive. The sector continues to benefit from structural changes in the media market including the ability to make ‘one to many’ advertising geographically and contextually relevant, further enabled by data and digitisation,” he said.
Outlook and guidance for FY20
oOh! commented that it expects the Out Of Home sector to continue to gain market share across the various media formats in FY20.
It anticipates underlying EBITDA pre AASB16 to come in between a range of $140 million and $155 million.
The company also expects to continue its disciplined approach to capital expenditure (capex) and has forecasted FY20 capex to fall in a range between $60 million and $70 million.
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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has recommended oOh!Media Ltd. 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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