oOh!media Limited has announced its financial results for the year ended 31 December 2020 (“CY20”).
In what the outdoor company has labelled a challenging year for the sector due to the Covid-19 pandemic, oOh! highlighted its market-leading position, announcing it had increased its market share in Australia and New Zealand. Additionally it implemented a series of measures to strengthen its financial position and reduce its cost and capital expenditure base by over $120 million.
Revenue declined by 34% to $426.5m for CY20. oOh!media noted significant revenue recovery in Q4 across key formats (Road, Retail, Street Furniture, NZ).
Underlying[3] EBITDA was $63.2m in CY20 compared to $139.0m in CY19
The company reported an underlying NPATA[4] loss of $8.0m compared to $52.4m profit in CY19.
Results Commentary
New chief executive officer Cathy O’Connor said oOh!’s decisive response to the Covid-19 movement restrictions across Australia and New Zealand ensured the company managed the short-term challenging conditions during the year.
“The unprecedented restrictions on people movement and resulting audience decline impacted out of home more severely than other media segments,” said O’Connor.
“In response, oOh!media acted quickly and decisively to maintain and strengthen our competitive position. That included a $167 million equity raising, refinancing of debt facilities, negotiation with property partners to deliver $63 million in net fixed rent savings, capital expenditure reduction of $49 million and operational cost savings of $16 million (excluding JobKeeper).
“In the meantime, the company adapted and refined our offer to advertisers, leveraging the strength of our suburban and regional network. The company also continued to invest in our network assets, including key digital sites such as Military Road in Mosman.
“The company remains focused on margin growth through the recovery cycle by achieving rent reductions beyond 2020, delivering structural cost savings approaching $10m annual run rate achieved at the end of CY20 and remaining disciplined on capital expenditure.
“As a result, oOh! has strengthened its capacity to manage in the current environment while remaining well-positioned to leverage the audience and revenue recovery already evident across our key formats.”
Revenue recovery in Q4 2020 extending into 2021
The company reported a strong recovery in revenue across key formats in the final quarter of 2020 which has continued into 2021 as people movement restrictions have eased. Overall Q4 paced at 70% of Q4 2019 versus 57% in Q3.
This recovery has been most pronounced in Road, Retail, Street Furniture and New Zealand. Q4CY20 revenue in Retail and NZ was over 90% of the prior corresponding quarter (Q4CY19).
The recovery has continued into 2021 with total revenue for January 2021 pacing at 80% of January 2019 levels. Road, Retail, Street Furniture and NZ revenue levels for January 2021 were at close to 100% of January 2019 revenue levels.
As expected, Fly and Locate continue to be impacted by significantly reduced passenger numbers and CBD audiences.
Fundamentals for out of home remain positive
Despite the challenges caused by Covid-19, O’Connor said the longer-term fundamentals for the sector remain positive.
“Out of home is a highly effective medium to deliver impactful national broadcast reach in all markets during this period and beyond.
“The company saw this through the Covid-19 pandemic with our network playing a pivotal role in public messaging for government agencies and regulatory authorities.
“Equally, the company continued to deliver ground-breaking and award-winning campaigns for advertisers, leveraging the diversity and scale of our market-leading inventory across formats and geographies.
“Our strategy remains focused on capitalising on the key structural drivers of growth in out of home and leveraging our diverse product portfolio, backed by data, to deliver results for advertisers.
“oOh!media is uniquely positioned to help drive the out of home industry’s share of overall media spend to around 10% in the next few years,” O’Connor added.
See also: oOh!media confirms appointment of Cathy O’Connor as Managing Director & CEO