oOh!media flags outdoor ad growth

Media group oOh!media has posted a 25pc jump in underlying earnings following its $570m acquisition of Adshel.

oOh!media boss Brendon Cook has defended the media group’s earnings and sales guidance for 2019, saying the benefits from its $570 million acquisition of outdoor advertising group Adshel will take time to filter through.

The company yesterday forecast underlying earnings of between $152-$162m in 2019, up from $112.5m last year, which disappointed some investors and led to a big share sell-off.

“I think the market probably was expecting the synergies to come through immediately, rather than as we had put in guidance. The real benefits start to flow through from 2020 and 2021 onwards,” Mr Cook told The Australian in an interview.

Mr Cook said investors were also “probably expecting a little bit more on the revenue” for 2019, but said the group has been “prudently cautious” around the period of the NSW and federal election as well as the banking royal commission, which wrapped up earlier this month.

oOh! media’s 2019 earnings guidance, excludes integration costs of around $7m and the impact from the change in accounting standard. It also takes into account an operating expenditure increase of between 5-7 per cent.

The company said 2019 earnings and revenue continued to be skewed towards the second-half of the calendar years, in line with previous years.

First quarter media revenue is up about 9 per cent from a year earlier.

Mr Cook said 2018 was a transformational year for the company, with the acquisition of Adshel, which has been renamed Commute.

“The acquisition of Commute brings the highly complementary segments of street furniture and rail to our portfolio,” Mr Cook said.

“This ensures oOh! has the most diverse and integrated national audience delivery network in the industry, extending our audience reach to well above 90 per cent of the Australian population, and the largest coverage in New Zealand.”

Mr Cook said Commute delivered strong revenue and earnings in the fourth quarter of 2018, with the group integrating the business with a new structure centred on serving its customers.

Net profit fell 5 per cent to $31.6m in 2018, hurt by costs related to the Adshel acquisition in September from HT & E.

Annual revenue jumped 27 per cent to $482.6m, thanks largely to contribution from Commute.

oOh! media has declared a fully franked final dividend of 7.5 cents a share, taking the full year dividend to 11 cents a share fully franked. That’s down from 15 cents in 2017, reflecting the 71.7 million shares issued under its entitlement offer last year in July.

Its shares closed 8.6 per cent lower at $3.73 in a slightly higher ASX.