oOh!Media Ltd (ASX: OML) has decided to defer payment of its final dividend for FY19 until 3 April. The dividend was previously due to be paid next Tuesday, 31 March. Shares in oOh!Media are currently suspended from trade pending an announcement from the company regarding a proposed capital raising.
Guidance withdrawn
oOh!Media previously withdrew its FY20 guidance, citing deteriorating market conditions and related market uncertainty caused by coronavirus. This is particularly relevant for oOh!Media as its financial year runs to 31 December 2020. Shares in oOh!Media have fallen from $3.40 at the end of January to just 84 cents a week ago when they were suspended.
In mid March, the company advised that revenue to date had been in line with the prior corresponding period. Performance in the first quarter had been consistent with FY20 earnings guidance provided in late February. Nonetheless, the increasing economic impacts of the coronavirus pandemic left oOh!Media with little choice but to back away from its guidance.
Out of home advertising hit
oOh!Media is an out of home advertising company with 37,000 digital and static assets across New Zealand and Australia. The company's billboards can be found on roadsides and in retail centres, airports, train stations, bus stops, office towers, cafes, gyms, bars, and universities.
With the populations of Australia and New Zealand increasingly isolating at home, there will be fewer viewers of oOh!Media's assets. Additionally, companies struggling in the potential coronavirus-induced recession will likely cut advertising and marketing spend, weighing on oOh!Media's earnings.
Managing costs
The company is taking action to proactively manage the business through this period and ensure it remains well positioned for when conditions stabilise. Capital expenditure is being re-prioritised and the company has advised it will be materially below the bottom of the previous guidance range of $60 million to $70 million. It is being vigilant on costs and maintaining strict cost and cash flow discipline throughout the business.
Other media companies impacted
oOh!Media is not the only advertising and media company to withdraw guidance and seek to shore up funds in the current environment. Seven West Media Limited (ASX: SWM) withdrew earnings guidance earlier this week due to a material fall in advertising market activity.
Nine Entertainment Co Holdings Limited (ASX: NEC) has also withdrawn its FY20 guidance, saying the forward ad market was becoming increasingly difficult to reliably predict.
