Nine profit jumps 55pc on stronger ratings and Willoughby sale

Nine shares surged after it posted a 55pc rise in net profit, in part thanks to better ratings and strong demand for advertising.

Nine’s Hugh Marks. Pic: AAP

Shares in Nine have surged 20.35 per cent after it reported a 55 per cent jump in net profit after tax partly as a result of better ratings and strong demand for advertising.

The free-to-air network and digital media company said NPAT increased to $116 million from $75m in the six months ended December 31 as Nine beat analysts’ expectations on the top and bottom lines.

Investors reacted positively sending shares up 35c to $2.04, just below the opening sale price of $2.05 per share when Nine floated on the ASX in December 2013.

Results were partly boosted by favourable items after tax including the profit from the sale of Nine’s Willoughby site in Sydney. This was on revenue of $720m, up 9 per cent from $659.2m in the prior corresponding period.

Much of the pick-up in sales was due to the popularity of ratings hits such as Australian Ninja Warrior and The Block. Earnings jumped 51 per cent to $181m from $120m.

Nine increased its interim dividend by 0.5c to 5.0 cent fully franked, saying it has recorded a bigger ratings and ad revenue share of an improving free-to-air ad market.

Group costs were down 1 per cent to $464m from $469m as a cost-cutting programme continues.

“This was a strong half for Nine, across our entire business,” said Hugh Marks, chief executive of Nine Entertainment Co., who noted that a focus on younger demographics where the majority of ad dollars are concentrated has paid off.

“Positive free-to-air TV ratings momentum combined with our focus on the 25 to 52-year old demographics is translating to improving revenue share.

“In Digital, 9Now is experiencing strong revenue growth and our digital publishing business has strong growth in premium revenues in line with our future strategy.”

Mr Marks said Nine’s streaming service Stan, a joint venture with Fairfax, is now approaching break-even after three years of losses. Active subscribers to Stan grew 33 per cent to 930,000.

Positively for the broader media industry, Nine said the TV ad market continues to trade strongly.

But Nine cautioned that while its revenue share is expected to grow in the second half of this fiscal year, major events on a “competing network will limit this potential”, specifically the Winter Olympics in South Korea and Gold Coast Commonwealth Games on Seven Network.