The Seven West Media Ltd (ASX: SWM) share price is on watch this morning following the release of its full year 2020 financial results.
Advertising market takes a big hit
Seven West Media reported an underlying EBITDA of $129.6 million for the 12 months to June 2020. This was a very sharp drop of 48.8% on the prior year, as the impact of the COVID-19 pandemic on advertising market conditions kicked in harshly during the fourth quarter. EBIT for the group came in at $98.7 million for the full year, down by 53.6% on the prior 12 months. Net profit after tax (NPAT) fell by a massive 66.1% to $40.8 million.
Total revenue from continuing operations came in at $1,227.1 million for Seven West Media. This was down by 14.0 per cent on FY 2019. However, total group costs from continuing operations decreased 7.1 per cent to $1,129.6 million. This result was achieved by major transformation initiatives implemented across the wider group.
But the digital segment almost doubles
EBIT for the digital segment grew very strongly by 92% during FY 2020. Seven West Media has placed a heavy focus on its broadcast video on demand BVOD platform. This has seen its 7plus digital platform dominate its free-to-air (FTA) competitors over the prior year.
7plus managed to achieve an average monthly commercial free-to-air BVOD market share of 46 per cent, during the April to July period. It also grew at double the overall average market growth rate.
Transformation strategy on track
Seven West Media has continued to execute well on its transform strategy, despite the challenging market conditions. The group's content-led growth strategy is already starting to bear fruit with the launch of original content such as Big Brother and a Farmer Wants a Wife.
Seven West Media chief executive officer James Warburton said:
It's been 12 months since I returned to Seven West Media and laid out our new strategy to transform the company. We have made material progress on our transformation plan despite the challenges that COVID-19 has thrown at us. It has not changed our plan, but assisted us to accelerate the transformation.
… Real structural change is under way at The West. Generational change across regional and community mastheads is in motion, with a digital-first editorial focus. Digital subscribers have almost doubled to 60,000 over the last 12 months.
Market Outlook for FY 2021
Due to the uncertainty still remaining in the wider advertising market, the group was unable to provide any FY 2021 earnings guidance.
Seven West Media is anticipating that advertising market conditions are likely to remain volatile and unpredictable during the first quarter of FY 2021. However, on a more positive note, the group reported the rate of decline had somewhat moderated since the last quarter.
Mr Warburton added: "We continue to focus on transforming our business. Our objective is to establish a lean, efficient operating cost base to deliver further savings in 2021 …".
The Seven West Media share price closed yesterday at $0.16.
