Southern Cross Austereo turns up the profit as it spruiks potential of Nine deal

The media group has soared to a two-and-a-half-year high after it posted a sharp uplift in profit and upbeat guidance.

Southern Cross Austereo.

Media group Southern Cross Austereo has seen its shares soar to a two-and-a-half-year high after it reported a sharp uplift in earnings and spruiked the potential of its new affiliation agreement with Nine Entertainment.

For the year to June 30, Southern Cross logged a 19.1 per cent lift in net profit to $77.2 million, with a significant reduction in financing costs helping earnings growth outpace revenue expansion of 5.1 per cent.

The profit and sales performance was broadly in line with market expectations.

Southern Cross (SXL) added its earnings before interest, tax, depreciation and amortisation (EBITDA) rose a more modest 2.8 per cent to $167.7m.

The company said it reduced its net debt by 32.9 per cent to $340.2m, with the sale of non-core assets crucial as it pushed to reduce interest costs.

“This year’s results reflect the operational and financial reset of Southern Cross Austereo, which has delivered improved financial performance for FY16 with prospect of further growth for FY17,” chief executive Grant Blackley said.

“SCA’s radio and television businesses are consistently outperforming the market, with improved audience share, consistent reinvestment in our content and marketing and a continuous focus on stronger monetisation of our assets.”

Southern Cross recently agreed a regional affiliation agreement with Nine Entertainment, after an extended period of close ties with the Ten Network.

The media group said the new deal would pace strong growth through FY2017, with 6-9 per cent expansion in EBITDA forecast.

The guidance points to EBITDA of $177m-$183m, well above average analyst projections for $168.3m.

“Our new television affiliation with Nine Entertainment will deliver considerable growth in FY17 following a seamless transition on July 1, 2016,” Mr Blackley said, adding revenue growth was expected across all assets.

The company’s shares rose as much as 16 per cent to a two-and-a-half year high of $1.442, before paring most of its rise.

Southern Cross declared a final dividend of 3.5 cents a share, with its total payout for the year up 12.5 per cent.