Southern Cross Media (ASX:SXL) share price falters despite increased profits

The Southern Cross Media Group Ltd (ASX: SXL) share price has fluctuated this morning, on the back of the group’s half-yearly results announcement.

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Southern Cross Media Group Ltd (ASX: SXL) shares have fluctuated in morning trade on the back of the group’s half-year results, which include an astonishing 59.3% rise in net profit.

After opening the day up by more than 2%, the Southern Cross share price is now down 2.47% to $2.37 as investors digest the group’s latest numbers.

What did Southern Cross Media report?

The media group declared a net profit after tax (NPAT) of $32.5 million, almost 60% higher than the $20.4 million profit declared for the prior corresponding period (pcp). The company attributed this growth to a leaner operating model and historically low debt levels.

While revenues were down 15.9% on the pcp, this was offset by a 23.6% expense reduction.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 11.5% on the pcp – to $75.3 million.

The group also advised that, subject to no adverse changes in advertising markets, it intends to pay a final dividend for the 2021 financial year. The decision on final dividend will be announced when Southern Cross reports its full-year results in August.

Who is Southern Cross Media?

Southern Cross Media broadcasts programmed content on free-to-air commercial radio, television, and online media platforms across Australia.

The company has 100 radio stations and 105 TV signals in both regional and metropolitan markets. It generates about 70% of its advertising revenue from radio and 30% from television.

Words from the CEO

Southern Cross CEO Grant Blackley gave the following comments on the announcement:

Advertising markets are continuing to improve towards pre-COVID levels as the economy recovers and government restrictions stabilise and ease. Our Q3 revenue is forecast to be between 6% and 8% below the pcp while costs for the full year will reflect the benefits of work done over the past few years to restructure our business.

Blackley added:

We have revitalised our key Breakfast radio shows, led by The Morning Crew with Hughesy, Ed, and Erin on 2DAY FM in Sydney, The Marty Sheargold Show on Triple M Melbourne, and Basil, Xav, and Jenna on our new Triple M station in Perth. This investment is critical to unlocking higher audiences, revenues and earnings.

The poisoned chalice of Sydney breakfast radio

When ratings super magnets Kyle and Jackie O left 2Day FM in 2013 for new venture KIIS 1065, 2Day FM plummeted from the top of the Sydney ratings to near the very bottom. At one point the station reached a low of 2.8% audience share for the time slot.

A cavalcade of hosts over the years came and went as Southern Cross searched for that winning formula again. At first the station went to well-known names Jules Lund, Mel B, and Merrick Watts – before later replacing Mel B with Sophie Monk.

The ill-fated Dan and Maz show later replaced them, only to be themselves succeeded in 2015 by Rove McManus and Sam Frost.

In 2017 Southern Cross Media replaced Rove and Sam with comedians Harley Breen and Em Rusciano. The media company abandoned breakfast programming altogether in favour of music-focused programming in 2019.

The group will no doubt be hoping the new formula of Dave Hughes, Ed Kavalee, and Erin Molan can find success in the fiercely competitive and valuable Sydney breakfast radio market.

Southern Cross share price snapshot

After reaching a low of 11 cents per share in April 2020 – at the height of COVID-19 pandemic – Southern Cross Media shares rocketed in November 2020 from 16 cents to a high of $2.65 by the end of the month. That’s an eye-watering 1,656% increase!

The Southern Cross share price opened today at $2.43 and has since dropped to $2.37 at the time of writing.

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