Nine (ASX:NEC) share price lifts 6% on first-half profit jump

The media company enjoyed a strong December half as Australia's two largest cities were plunged into lockdowns.

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Key points

  • Revenue, earnings and profit all up for year ending 31 December
  • Growth in all major business segments
  • Dividend increased 40% from first half of the previous financial year

The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price is climbing this morning. This comes after the company exceeded previous guidance to report growth across the board for the half-year ending 31 December.

The media company's share price is up 5.9% to $2.87 in early trade on Thursday. 

Nine share price rises on strong result

The Nine share price is soaring on the back of the company's strong half-year (H1 FY22) results. Highlights include:

What else happened in the first half?

Australia's two largest cities were plunged into long winter lockdowns during the December half, while the Delta variant of COVID-19 wreaked havoc.

It seems Nine made hay while millions of Australians were trapped at home looking for entertainment.

The company revealed growth in all its media — free-to-air television, streaming (Stan), digital newspaper subscriptions, and real estate classifieds (Domain Holdings Australia Ltd (ASX: DHG)). This appears to have been reflected in the Nine share price today.

What did management say?

According to Nine chief executive Mike Sneesby, the 2022 financial year could set a new high mark for the company.

Momentum remains clearly positive, with full-year guidance now of around 25% group EBITDA growth to what would be a record result for Nine.

Importantly, these results continue to be delivered by increasingly diversified, and increasingly digital revenue streams

He added that there were opportunities galore in 2022.

"We have balanced our programming decisions across broadcast and streaming, and carefully invested in and expanded the reach of 9Now, resulting in record total television revenues in calendar 2021, more than any year in Nine's history.

"At Stan, we are continuing to grow revenues and subscribers while expanding our annual volume of Stan Originals as we take greater control of our premium content pipeline and continue to invest in Stan Sport. 

"In radio, we have been strengthening our underlying business, while building our audiences, and with 23% of our listeners now live streaming our content, there is a real opportunity to further expand our digital revenues. 

"And in publishing, we will continue to invest in the product, ensuring greater audience reach and higher subscriber numbers, of course augmented by the licensing agreements with Google and Facebook."

What's next?

Nine has already started the second half strongly, leading TV ratings in "all key demographics" to be more than 10% ahead of its nearest rival for prime time on its main channel for the 25 to 54 age group. It has a 7% lead on a total people basis.

The Australian Open tennis tournament in January no doubt was a huge contributor, as Ash Barty became the first Australian woman to win the singles title in 44 years.

"In total, Nine is now expecting FY22 group EBITDA growth of above 22% on FY21's $565 million," the company stated.

"This result continues to highlight the benefits of Nine's business, with diverse earnings drivers (across advertising and subscription) and a growing portfolio of digital assets."

Nine share price snapshot

The Nine share price has not lit the world on fire the past 12 months, falling by around 2%. It hasn't fared much better in recent weeks, losing around 1% for the year so far.

However, it has performed reasonably over the long term. The stock has gained in excess of 170% over the past 5 years, while giving out a dividend yield of 3.87% before Thursday's announcement.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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