For the year ending 31 December, the “out of home” ad company saw:
- A 34% drop in revenue, reporting $426.5 million
- A net loss after tax excluding acquisition-related amortisation of $8 million, compared to a profit of $52.4 million in 2019
- Underlying EBITDA of just $63.2 million, which is less than half of $139 million recorded in 2019
“Out of home” advertising includes placements like trains stations, airplanes, shopping centres and roadside billboards.
People staying home due to the coronavirus downturn hammered that subsector much worse than other parts of the industry, according to oOh!Media chief executive Cathy O’Connor.
So the company had to act “quickly and decisively”, she said.
“That included a $167 million equity raising, refinancing of debt facilities, negotiation with property partners to deliver $63 million in net fixed rent savings, capital expenditure reduction of $49 million and operational cost savings of $16 million (excluding JobKeeper).”
The company, which previously had a 6% yield, will continue to suspend dividends.
Optimism for post-COVID recovery
Despite the unflattering numbers from 2020, the prospect of vaccines and workers returning to physical commuting has oOh!Media confident about 2021 and beyond.
Already in the 4th quarter of 2020 the company was back to 70% of pre-COVID revenue, compared to just 57% in the 3rd quarter.
O’Connor also expects to cut further costs.
“The company remains focused on margin growth through the recovery cycle by achieving rent reductions beyond 2020, delivering structural cost savings approaching $10m annual run rate achieved at the end of calendar year ’20 and remaining disciplined on capital expenditure.”
Investors seemed to also take the optimist view, sending the oOh!Media share price 6.4% higher in early trade on Monday.
Lennox Capital equity analyst Olivia Salmon said last month that one of her regrets out of 2020 was not buying into oOh!Media when it executed the emergency capital raise.
“This was a make-or-break capital raise for the company, and this was at the height of the pandemic. We were just too nervous about those earnings coming through.”
The share price was down to 59 cents near the end of March. It is trading now at $1.57, while it had surpassed $3.60 in the middle of 2019.
oOh!Media plays in a pretty reliable space, according to Salmon.
“What you’ve obviously seen is the ad market improve out of sight. Outdoor media is one of these assets that I think will be around for the long term and is unlikely to really be cornered out by digital advertising any more than it already has been.”