oOh!media hopeful advertising spending will ramp up
Outdoor ad company oOh!media says clients are starting to spend money again after slashing spending during the coronavirus crisis.
Outdoor advertising company oOh!media expects demand to pick-up over the coming months after its interim financial results were hammered by the coronavirus crisis, forcing the company to embark on a major cost-cutting drive.
Chief executive Brendon Cook says trading has started to improve as clients resume spending on outdoor ads following the easing of government COVID—19 restrictions after second-quarter revenue dropped 62 per cent.
Mr Cook said August is tracking at 60 per cent of the previous corresponding period, compared with 25 per cent in May, and the market fallout from the second lockdown in Victoria has been more subdued than that in May.
“Each month is getting much stronger, and August is stronger than July and September will be stronger than August, and that’s just a reality as it continues to grow back towards whenever the economy allows the media market to get back to parity,” Mr Cook told The Australian.
oOh!media flagged in June that it was seeing green shoots as advertisers looked to resume spending, with the nation’s two major radio station owners Southern Cross Media and HT&E last week reporting some early signs of improvement in ad spending.
Mr Cook also said the group maintained its market share and bolstered its balance sheet during the difficult market conditions, which was well received by investors.
Its shares were up 15 per cent to $1.02 just after lunchtime.
The group is providing clients with extensive consumer mobility data, including regional versus metropolitan markets, to help clients reach their target audience.
“A big thing for us was getting some certainty around our base audiences, which is still very large and showing clients how they can reach those audiences,” Mr Cook said.
The group’s management team have worked hard to maintain market share and strengthen its balance sheet, including a $167m capital raising at the start of the pandemic. Net debt has fallen by 67 per cent to $115.2m with $230m in available undrawn facilities.
As part of its $80m cost cutting drive this year, oOh!media is targeting $31m from fixed rent expense savings, more than double its March forecast of $10-$15m. In addition, $14m of fixed rent payments that were due this year have been deferred to the first-half of 2021.
It also expects to book operating expenditure savings of more than $15m, excluding the $7m received under the Morrison government’s JobKeeper program, and capital expenditure is forecast to come in below $30m.
oOh!media also said it is “committed to achieving rent reductions beyond 2020” through selective site terminations with “further network pruning efforts and negotiations”.
Its first-half revenue fell 33 per cent to $205m because of the sharp downturn in the second quarter to June as companies slashed spending. Its Fly division was the biggest casualty, with its second-quarter revenue dropping 86 per cent, and all other segments reporting a double digit drop.
The revenue drop saw the company swing to a net loss of $27.5m, and no interim dividend payment as flagged at the time of its capital raising in March.
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