Nine Entertainment share price lifts despite net profit diving 38%

Media conglomerate manages to hold revenue steady despite economic headwinds.

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Nine Entertainment Co Holdings Ltd (ASX: NEC) shares are up 0.49% in early trade on Thursday morning after the release of its annual report.

The Nine Entertainment share price is trading at $2.04 at the time of writing, following Wednesday's close at $2.03.

What did the company report?

  • Revenue from ordinary activities flat at $2.704 billion
  • Net profit after tax (NPAT) from ordinary activities down 38% to $194.5 million
  • Group earnings before interest and tax (EBIT) down 21% to $435.5 million
  • Net cash flows generated from operating activities down 28% to $351.8 million
  • Net debt up 61% to $523.2 million
  • Final dividend of 5 cents brings the 2023 total to 11 cents, which is lower than the 14 cents total last year

What else happened in FY23?

Nine Entertainment's main battle over the financial year was the declining Australian economy, on the back of 12 interest rate rises. Higher loan repayments mean less money to spend for consumers and businesses, and a shrinking advertising market.

The company claimed that its total television business has had "an extraordinary year" with record revenue share results.

What did Nine Entertainment's management say?

Nine chair Peter Costello said on Thursday:

Whilst we faced tougher economic conditions which have impacted the broader industry, Nine has risen to the challenge, continuing to drive audience and revenue share, and investing in the future of the business while focussing on the efficiency of our cost base.

Chief executive Mike Sneesby said:

Every month, across Nine's television, publishing and audio assets as well as Stan and Domain, we reach almost 20 million people. It is this broad reach which gives Nine its unique position — our ability to distribute content to the broadest possible audience; to monetise that content in multiple ways and to use our extensive first party data to ensure optimisation of audience and revenue.

What's next for Nine Entertainment?

The economic downturn is not expected to do Nine any favours in the 2024 financial year. While not giving specific group-wide guidance, the company stated it expected metropolitan free-to-air television market and radio advertising revenue would both decline in the first quarter.

"Whilst the current market conditions remain challenging, Nine's broad base of revenue and scale enables maintenance of investment in content and product. This is expected to result in further improvement in Nine's competitive position through the cycle, while the group also remains disciplined around operating costs and underlying efficiencies.

"Nine's strong cash flow and balance sheet enables the continuation of the buyback and 60-80% dividend payout, as well as providing the flexibility to consider strategic and targeted investments that will underpin the longer term growth of the business."

Nine Entertainment share price snapshot

Before market open on Thursday, the Nine share price was trading 12.09% higher than where it started the year.

This is well ahead of the S&P/ASX 200 Index (ASX: XJO), which is 3.37% up for the year.

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 recommended Nine Entertainment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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