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Summary
- Out of Home advertising company oOh!media could maintain its market share despite the existing challenging situation.
- Although oOh!media witnessed a drop in revenue and profit, the decision taken to raise capital supported the Company to reduce its debt by 67%.
- Commute and Rail revenues were heavily impacted amid COVID-19. The rail revenue declined due to a drop in the passenger count in key stations like Sydney and Melbourne rail.
- Q3 remains to build on Q2 with August 2020 presently pacing at 60% of pcp against 25% for May 2020.
A constituent of ASX200, oOh!media Limited (ASX:OML) is an Out of Home media company creating engaging environments that assist advertisers, landlords, leaseholders, community organisations, local councils and governments to reach a wide range public audiences.
On 24 August 2020, OML announced its 1H FY2020 results for the period ended 30 June 2020. The Company, during the period, experienced the impact of COVID-19 on its business. However, it was able to maintain its market share and strengthened its balance sheet because of the quick response to the challenges posed by COVID-19. Though oOh!media witnessed a drop in its revenue and profits, its decision to raise additional equity, reduce costs and capital expenditure, and manage cash flows helped in reducing the debt by 67% and positioned the Company well for the future.
Let us take a quick on 1H FY2020 results:
- Revenue dropped by 33% to A$205 million. The results were impacted in Q2 due to COVID-19.
- Underlying EBITDA, which was A$56 million in 1H FY2019, decreased to A$10.8 million in 1H FY2020.
- Experienced Underlying NPATA loss of A$16.9 million, compared to a profit of A$18.2 million in the previous corresponding period.
- Reported Net Loss after Tax of A$27.5 million.
In Q2 FY2020, the pandemic heavily impacted the revenue of oOh!media’s business segments Commute and Rail. The revenue from rail segment got affected because of the drop in the passengers in key stations like Sydney and Melbourne rail. The Road segment was the best performing format with audiences regaining firmly in June 2020. The Retail segment delivered a mixed performance with smaller / grocery weighted centres doing better than the destination or Tier 1 centres and performed mostly in line with Road in Q2. The Fly and Locate segments were heavily impacted during the second quarter with a substantial drop in passengers and CBD audiences.
Also, oOh!media continues to be a leader in the industry in creating a new media business and is positioned uniquely to drive the Out of Home industry’s share of total media to spend more than 7% in 2019 to 10% in the next couple of years.
Out of Home Audiences Recovering:
Brendon Cook, the Chief Executive Officer of OML, said that Out of Home continues to be a very useful medium to provide effective national broadcast reach in all markets throughout this period and beyond.
In New Zealand, oOh!media noted growth in the audience, which resulted in a 36% rise in the revenue in July from June 2020.
The Company took the support of advanced mobile data and noted that Out of Home audiences are returning across Australia when looked at nationally. The total Out of Home audience volumes were tracking at 75%, as on 17 August 2020, of their 2019 level, up from a low of ~50% in mid-April 2020.
The combined roadside and retail audience volumes in regional areas have recovered to 93% of their level compared to the same week the previous year. A similar trend was seen in suburban areas which at present stands at 68% of 2019 levels as per the roadside audience measurements.
Despite the lockdown in Victoria, oOh!media was able to cross 370 million contacts per week nationally across the billboards & shopping centre networks alone.
Mr Cook also stated that the longer-term fundamentals for Out of Home remain positive despite the challenges imposed by COVID-19.
Amid these challenging situations, oOh!media remains focused on capitalising on these vital structural drivers of growth as well as leveraging its diverse product portfolio, supported by data, to provide results for advertisers.
DO READ: The Changing Scenario for Media Stocks – OML, SVW, SXL
Outlook:
The trading conditions remain uncertain. Hence, oOh!media feels it difficult to forecast on this front. The third quarter continues to build on the second quarter with August presently pacing at 60% of pcp against 25% for May 2020. OML continues to promote the strength of its metro suburban & regional audience as the #1 in the market. It would also focus on managing its costs and liquidity to ensure the strength of the business to bounce back once the growth cycle resumes.
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Stock Information:
Although the performance of oOh!media was not up to the mark in the first half, the recovery in the Out of Home Audiences and Company’s positive outlook had a positive influence on the market participants.
At the end of the trading session on 24 August 2020, OML share price stood at A$1.040, up 17.514% from the previous close. The stock has delivered a negative return of 16.51% in the last three months. However, the performance was 4.12% in the last month. OML has a market capitalisation of A$523.73 million and 591.79 million outstanding shares.
