oOh! profits rise as digital takes over

oOh!media is crediting its strong financial half year results to its expansion into digital outdoor advertising, with the company experiencing double digit growth in revenue up 13.1 per cent to $380.3m, and underlying earnings before interest and tax, depreciation and amortization (EBITDA) up 22.5 per cent to $90.1m for the first half.

Digital revenue as a percentage of total revenue rocketed to 59.8 per cent for the full year, up from 45.6 per cent for the year before, superceding print as the majority revenue earner, and extending the strong first half gains in revenue from oOh!media’s digital network of 8,000 screens. Digital revenue was $227.4m, up 48.3 per cent from $153.3m in 2016.

oOh! now has some 8000 digital panels across Australia and New Zealand, along with 12,000 classic (print) panels and eight online platforms.

Combined revenue from Junkee Media and Cactus Imaging, both acquired the year before, more than doubled to $18.3m, up from $7.6m. Cactus Imaging in particular provides print outdoor advertising across the company’s network.

[Related: oOh! signs retail digital deal]

The company saw a gross profit of $175.5m, up 21.1 per cent from the previous half year period, with the gross profit margin increasing from 43.1 per cent to 46.2 per cent. For the first half, oOh! had a net profit after tax of $33.1m, up 35.5 per cent from $21.5m for the same period the year before.

Brendon Cook, CEO of oOh!media says, “oOh! has delivered a quality financial result which continues the strong performance since our listing in 2014. The Company has increased revenue by 46 per cent and more than doubled Underlying EBITDA to $90.1m since 2014.

“While the Out Of Home sector has performed strongly, we are growing our business faster than the market by continuing to lead the market in delivering innovative solutions for clients to integrate data and content as part of our audience-led strategy across our network.  

“Over the course of the year we have worked with clients to deliver ground-breaking campaigns, leveraging our investment in data and audience insights, to deliver outstanding results for advertisers.”

Around 12.1 per cent of revenue is attached to contracts up for renewal this year. Road and Retail continued to deliver double-digit revenue growth, with Road up 10.0 per cent to $137.1m and Retail increasing by 15.7 per cent to $126.3m.

[Related: Digital surpasses traditional at oOh!]

Within Road, the company converted 21 premium screens to digital during the year, bringing the total of metropolitan-owned large format digital screens to 64. oOh! says the Retail business has also benefited from extensive digital capital investments in the prior two years. The company is forecasting its full year EBITDA will be in the range of $94 to $99m. oOh! intends to spend between $30 to $40m in capex for the remaining half year, primarily on conversion of signs to digital along with other business strategies. 

Cook says, “The diversity and scale of our product offering across our physical assets, combined with engaging content and the ability to provide growing connections through online, mobile and social media provides a compelling opportunity to advertisers to connect with their desired audiences.

“We are confident that our investments in our portfolio, data capability, systems and people provide us further opportunity to leverage the scale of our platform to deliver the next phase of revenue growth and sustainable value creation for shareholders.”

The company increased its market share in the Out Of Home (OOH) advertising sector, which, according to the Standard Media Index, grew at 7.3 per cent in 2017 compared to the overall media sector growth of 0.7 per cent.

Capital expenditure of $33.9m, down 13 per cent on the prior year, which the company says reflects its continued disciplined and focused approach to digitisation of assets across its portfolio.  

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