Nine Entertainment Co (ASX: NEC) shares end 3% lower as 1HFY23 profit dips 11%

By - Versha Jain

Highlights:

  • Nine Entertainment Co. (ASX: NEC) revenue for the first half of FY23 increased 5% over the year.
  • Its EBITDA, before specific items, came in accordance with NEC's guidance.
  • The board decided to pay an interim fully franked dividend of 6.0 cents per share on 20 April 2023.

Nine Entertainment Co. Holdings Limited (ASX: NEC), the stock experienced around a 3% fall after announcing its half-yearly (ended 31 December 2022) results on Friday, 23 February 2023. 

The stock declined 2.912% to AU$2.0 by the close of the market session on Thursday. 

The media and entertainment company's revenue for the first half increased by 5% to AU$1,403 million over the year. Its EBITDA, before specific items, came in at AU$370.5 million, in line with the guidance of 'around AU$370 million' the company gave in December. EBITDA came 9% lower than it was in H1FY22.

Its revenue grew across its divisions like Broadcasting, Digital and Publishing, Domain Group, and Stan. 

The broadcast revenue grew by 5%, television revenue grew by 5%, and radio increased by 11%. The revenue from publishing remained unchanged compared to the previous year. Stan and domain segment revenue grew 12% and 6%, respectively, driven by the increasing number of active subscribers. 

NEC is focused on diversifying its revenue base. It reported an approximate 9% increase in subscription and licensing revenue, making 26% of the total revenue ex Domain, from its wholly owned business, Stan and Publishing. 

Despite revenue growth, its profit declined. Its net profit after tax (NPAT) came in at AU$189.5 million, down 11% YoY.

However, the board determined to pay an interim 100% franked distribution of 6.0 cps at a payout ratio of 56% of the NPAT and before specific items.

The distribution is slated to be paid on 20 April to the stakeholders of record on 06 March 2023. For H1FY22, it delivered a dividend of 7.0 cents per share, which means a decline of 14% YoY in interim dividend this year (FY23).

Outlook for the third quarter and FY23

Amid the uncertain market, the company delivered growth across segments. For the third quarter of FY23, it expects to grow its television share while at the same time expecting an increase of low single digits in total television in the second half of FY23.

Revenue from advertising is expected to decline in Q3 to low-to-mid single digits percentage points.

For radio's ad revenue, the company expects a mid-single digits (%) growth with higher digital revenue from streaming. For the publishing segment, it sees continuous growth with a growing digital audience, and lastly, for a digital subscription, it anticipates a 4% growth in revenue in Q3.

Stan grew with strong content performance in H1FY23; Nine expects revenue and EBITDA to grow further from this segment in FY23. 

With the stronghold in managing costs, the company remains confident to continue investing in the business and setting it for long-term growth.