Profits surging at APN Outdoor

Profits have surged at APN Outdoor as the booming wide format market grows at record levels on pace to crack $700m this year.

The outdoor media company expects to pocket $68-69.5m EBIDTA for the 2015 calendar year – 21-23 per cent higher than forecast in its prospectus ahead of going public late last year.

This would also be a 50 per cent bigger EBIDTA than 2014, and its share price surged 11.4 per cent on the announcement despite coming on a bad day for the ASX.

Bumper expectations follow already strong first half results that beat analyst predictions – revenue up 25 per cent to $136.3m and profit at $12.9m up from a $3.7m loss.

[Related: More wide format news]

The Outdoor Media Association today released monthly figures for October showing the sector is up 19.4 per cent from last year, following a record September which was up 23.1 per cent on last year.

A total of $532.8m has been spent on outdoor media so far this year, up 17.1 per cent on the same time in 2014, with the big months of November and December still to come.

If the sector holds this pace it will crack $700m and be a quarter of the way to fulfilling OMA chief executive Charmaine Moldrich’s goal of adding $400m to hit $1bn by 2017.

The runaway success of outdoor media has spurred numerous commercial printers to enter the sector, with CMYKhub, Bright Print, and SOS jumping in and Blue Star beefing up its arsenal with two acquisitions.

However, the rise of digital out-of-home threatens to steal some of the opportunity for printers, with APN Outdoor noting in the same announcement that it is on track to digitise 17 billboards.

Digital now makes up 25.3 per cent of OMA revenue, up from 16.5 per cent a year ago as big companies and the OMA itself relentlessly pursue digitisation agendas and promote digital billboards as superior to print.

Instead of waiting for their profits to be gobbled up, some printers have taken matters into their own hands and already got into the digital billboard market.

Brisbane printer Valley Edge Design has installed a 6×3 metre digital billboard with plans for three in the next two years and 10 by five years, while SS Signs has multiple truck-mounted LED screens and is investing in another seven.

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