Out of home operator oOh! Media achieved strong numbers across the board in its first half results, but revenue from its classic (static) portfolio shrank by seven per cent.
Profit growth was double that of revenue growth, with four fifths of growth coming through digital media.
However CEO Brendan Cook says the company believes printed outdoor media has ‘a key role’ in the future of the company, and says it will continue invest in its classic portfolio.
Cook attributed some of the decline in classic outdoor to the company converting prime assets to digital in key – high earning – locations.
The drive to digital is accelerating, with oOh! Increasing its capex spend for this year from $25m to $35m, some 90 per cent of which will be spent on asset conversion to digital.
The company is already way ahead of its digital conversion schedule, with digital revenue accounting for 44.5 per cent of revenue in the half, up 50 per cent from 29.5 per cent in the pcp. oOh! had originally planned to achieve 45-50 per cent digital by the end of 2018.
oOh! now has some 130 large format digital assets around the country having added 18 more during the half, and has some 6000 digital panels, along with around 15,000 static panels. It plans to increase its large format digital assets by around 25 per cent by the end of the year to get to 160.
Cook says that not all of its high earning static assets will convert to digital, in some locations there are regulatory reasons why that will not happen.
Cook highlighted the recent purchase of large format printer Cactus Imaging (too late for the first half report) as evidence of the company’s belief in print, and told ProPrint that the company had ‘significant plans which we cannot divulge at the present time’ for Cactus.
Gross profit for the first half was up by 40 per cent to $60.1m, revenue was up by 18 per cent to $146m, EBITDA of $26.8m was up 32.7 per cent on prior corresponding, with NPATA of $11.4m was up 34.8 per cent on prior corresponding period. oOh! Is issuing an interim fully franked dividend of 4.0 cents per share, which is 41 per cent higher than the pcp.
CFO and COO Peter McClellandsays that 81 per cent of the growth has come through digital, but reiterating Cook’s position says that ‘static has a huge role’.
Cook says that the first half encompassed an early Easter, an election, and the Olympic Games, all of which were beneficial for the business.
CEO, Brendon Cook, said: “The business posted strong results, with diversified revenue growth underpinned by solid margin expansion. We delivered a number of key initiatives against our strategy which sets the roadmap for continued sustainable growth.
“We are investing now to be the new media business of today and into the future. This is being achieved by building a diversified and unparalleled portfolio of assets to deliver a world-leading approach to audience based connections.
“The Out of Home market continues to grow through digital asset conversions, and we continue to be a leader in the industry in this regard. Our strategy is an end-to-end digital strategy, offering the most advanced metrics to create unmissable campaigns for our clients by integrating Out Of Home advertising with mobile, online and social media offerings.
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