Coronavirus brings surprise cost savings at outdoor advertising company oOh!media

The group has saved more than $20m in fixed rent costs, ahead of its forecast of $10m-$15m.

Brendon Cook, chief executive, oOh! Media

Outdoor advertising company oOh!media is seeing green shoots as advertisers look to resume spending following the coronavirus crisis and bigger-than-expected rental and operational cost savings.

Chief executive Brendon Cook said the group was starting to see a “significant uplift in client briefing activity” for June and the third-quarter as advertisers began to look for opportunities as movement restrictions continued to be relaxed.

There had already been an increase in road and retail foot traffic in metropolitan and regional areas.

Of the group’s original ad bookings in April and May that advertisers pulled, around 85 per cent have been deferred to the second half of the year.

“Our inventories have a strong suburban skew, which provides more advertiser options as they return to spending,” Mr Cook told shareholders during its annual general meeting, which was held on Thursday via webcast.

oOh!media, which raised $167m at the end of March to shore up its balance sheet during the economic downturn, saved more than $20m in fixed-rent costs.

Mr Cook said the group had rent abatements built into some of its leases and continues to have “constructive discussions with our commercial partners, with significant progress being made with several key landlords”.

The company also expects to hit the higher end of its $10m-$15m operating expenditure savings target, with all discretionary expenditure suspended. Office-based teams continue to work from home, and staff have also agreed to a 20 per cent reduction in hours and pay for three months.

The federal government’s $130bn JobKeeper payment scheme will also deliver a further $7m a quarter, Mr Cook told shareholders.

The company, which also owns pop culture and news site Junkee, is on track to achieve the higher end of its $25m-$35m capital expenditure target, he said.

Mr Cook, who has been at the helm for 30 years, said the outdoor advertising industry has been “impacted more proportionately than other forms of media, given the audience decline as a direct result of the movement restrictions in relation to COVID-19”, particularly at airports.

As a result, oOh!media’s operations at airports and railway stations have been hit “significantly”, which together with a slowdown in advertising generally, resulted in a “challenging” second quarter, he said.

Chairman Tony Faure said the search for a new CEO continues, noting that Mr Cook would stay with the company until the end of the year as announced during its capital raising in March.

The company’s shares closed 1.8 per cent lower at $1.10, after some early morning gains, in a higher market on Thursday.