Seven West Media full year results: Revenue, profit & costs down

• Seven West Media reports a profit

Seven West Media CEO Tim Worner has delivered the company’s full year results.

Highlights

• Underlying EBIT of $236 million, at upper end of $220-240 million guidance
• Over-delivered on cost out target with group costs down $21 million
• Underlying net profit after tax of $142.5 million
• Group net debt reduced to below $635 million
• Strong resurgence in ratings performance with ongoing momentum
• Forecasting 5%-10% underlying EBIT growth in FY19
• New Prime affiliate agreement delivers material step up in revenue share, effective July 1, 2018, with further step up in FY20

Seven West Media’s managing director and chief executive officer Tim Worner said:

“Throughout the financial year we have maintained a single-minded focus on improving our core business with ratings, revenue and our costs savings initiatives the priority.

“I’m pleased to report that we have delivered underlying EBIT at the upper end of our guidance, we have over-delivered on our cost out targets and significantly reduced our debt.

“Our transformation accelerated in the second half of the financial year and delivered $61 million of cost savings on our initial $40 million target. These savings, which included a 7% reduction in FTEs, more than offset the anticipated AFL uplift and spectrum charge. The transformation will continue in FY19, targeting further cost reductions in each of the three operating businesses and will deliver a $10-20 million net group cost reduction, including cricket.

“At the same time we have delivered a record-breaking ratings performance in the 2018 calendar year to date, and grown our share across every key demo at the expense of our competitors, resulting in a 12th consecutive financial year at number one.

“The momentum will be driven further by our historic six-year agreement with Cricket Australia that, together with AFL, locks in premium sport all year round. Our cricket deal provides us 400 hours of premium sport across the summer, which we will carry live and free across the screens of 7. We are the first FTA network to have both the BBL and Tests, meaning we can cross-promote and monetise the two most popular forms of the sport like never before.

“Having the number one network, channel and multichannel is particularly advantageous as we are now operating in a growing market. The FTA metro market has delivered its second consecutive half of growth, with the sector benefiting from industry initiatives to promote the effectiveness and ROI that only TV delivers. We expect growth to continue in the 2019 financial year.

“Our production business Seven Studios is a key differentiator between us and our competitors. It delivered another year of strong earnings growth, grew our international market presence and is set to capitalise on the exponential global demand for content and formats.

“The recent successful launch of 7plus was a key milestone in our strategy to take full control of our direct to consumer products. It gives us a fully owned and operated platform to evolve our distribution model and drive greater monetisation of our content. Strategic new content deals are reshaping the acquisition and monetisation of rights and our 2.6 million monthly viewers now have more than 6,000 on-demand episodes to choose from.

“Our publishing assets are outperforming in their respective categories, while undertaking significant restructuring. The results are clear, with Pacific’s EBIT up 170% on last year and The West driving improved trends with a refreshed sales strategy.

“We are executing our strategy at great pace, maintaining our focus on the core to continue to drive a stronger performance in ratings and revenue, while transforming the business to be more lean and agile. Growing our studios business, digital assets and investment portfolio underpins growth across the business.

“We very well placed to meet the challenges, and capitalise on the opportunities, ahead of us, and forecast 2019 EBIT growth of 5%-10%.”

Results

Seven West Media reports a profit after income tax of $142.5 million on total revenue of $1,622.8 million. Profit last year was $166m on revenue of $1,679.4m.

EBITDA of $270.9 million is down from $306.7 million in the prior financial year with EBIT of $235.6 million after $261.4 million in FY18.

Outlook

Looking forward, the group’s strategic goals for the 2019 financial year include:

• Underlying 5%-10% Group EBIT growth
• Continued efforts to deliver and identify new cost savings
• Maintain focus on the core: revenue and ratings
• Targeting >40% summer share in growing market
• Ongoing investment in produced content and digital platforms
• Maximise value from owned content through every window
• Drive greater adoption of 7plus to be clear BVOD market leader
• Invest in verticals where we can leverage our audience and platform of brands

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