Southern Cross (ASX:SXL) share price booms 6% as profits nearly double

The company has had quite the turnaround from the previous financial year.

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The Southern Cross Media Group Ltd (ASX: SXL) share price is jumping 6% after releasing its full-year results for FY21.

At the time of writing, shares in the media company are trading for $1.95 – up 6.27%. For context, the All Ordinaries Index (ASX: XAO) is 0.07% higher.

Let’s take a closer look at today’s news.

Southern Cross share price jumps on 91.6% rise in profits

  • Net profits after tax (NPAT) of $48.1 million – up 91.6% on the prior corresponding period (pcp)
  • Revenue declined 2.2% on the pcp to $529 million but expenses also fell 6.8% to $403 million
  • This equates to earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $126 million, which is 16.4% higher
  • While revenue was down overall, second half revenue increased 16% on the prior year. The company says this reflects “the recovery in the media market”.
  • The company will pay a final dividend of 5 cents per share – representing 85% of second-half NPAT. At the current Southern Cross share price, this represents a yield of 2.59%.

What happened in FY21 for Southern Cross?

The biggest story affecting the Southern Cross share price, and the entire media industry and share market in general, is COVID-19. The pandemic decimated advertising revenues across mediums as companies pulled advertising. Victoria was in the midst of its brutal second lockdown at the beginning of the period, and New South Wales entered its second lockdown at the end of the period.

Nine Entertainment Co Holdings Ltd (ASX: NEC) pulled its regional affiliation with the broadcasting company in March. The Southern Cross share price plummeted 14% on the day this was announced.

Finally, Southern Cross was kicked out of the S&P/ASX 200 Index (ASX: XJO) during the financial year.

What did management say?

Southern Cross Austereo CEO Grant Blackley said:

Our Australia-wide network of 99 AM, FM and DAB+ radio stations remains the creative core of SCA, but with a new digital-first mindset. With audiences increasingly choosing to listen via digital means, our teams are finding ways to make it easy to enjoy our radio shows, podcasts, music playlists, news and other local updates on LiSTNR and other platforms.

He added:

SCA’s Television business performed well, delivering EBITDA of $38.1M, up 59.7% compared to the prior year. While this result benefited from government support in the first half of the year, it also reflected the relatively quicker recovery of television advertising markets and SCA’s market-leading sales performance.

What’s next for Southern Cross?

From this financial year, Southern Cross has a new affiliation agreement with CBS Corporation Common Stock‘s (NASDAQ: VIAC) Australian business, Network 10. Blackley says this deal should be earnings neutral.

Finally, Blackley confirmed Southern Cross has signed an agreement with Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) to join Google News Showcase. He says the deal will not have a material impact on earnings.

Southern Cross share price snapshot

Over the last 12 months, the Southern Cross share price is up 14%. Year to date, however, it is down 13%.

Southern Cross has a market capitalisation of approximately $485 million.

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