Leading out-of-home advertising provider oOh!media has reported a 3% fall in revenue to AUD$288.3 million for the first half of 2024, mainly due a short-term market share loss, being the loss of a major shopping centre contract.
The digitisation of outdoor billboard sites is higher in Australia than any other country
oOH!media's report to the ASX says that underlying net profit after tax was down 11% to $18.2 million. Statutory profit was down 10% to $5.8 million. The company said that it is tightly managing costs and taking decisive action to address revenue performance and regain market share. Looking ahead, oOh!media said that the September quarter media revenue was looking to be up 2% but impacted by a weak July.
oOH!media CEO Cathy O'ConnorCEO Cathy O’Connor said: “For oOh!, our 3% revenue decline was attributable to the previously announced exit of the Vicinity contract, and recontracting of a significant street furniture contract that reduced non-media revenue in return for lower fixed rent."
Vicinity Ltd (formerly Centro), is a major retail and shopping centre asset management organisation with responsibility for 60 retail sites across Australia, including the iconic Chadstone centre in Melbourne and the elegant Queen Victoria Building in Sydney's CBD. 2023 revenue was in the region of $1.2 billion. The Vicinity retail advertising business appears to have been transfered to Cartology, owned by Woolworths.
On losing the Vicinity business, O'Connor adds: "While this impacted revenue, it protected the gross profit margin. Adjusting for these contracts, revenue grew 3%. We have taken decisive action to address the loss of market share, including accelerating the digitisation across our retail portfolio to offset the Vicinity contract exit, renewing our sales leadership team and strengthening our sales capability. We are confident in these actions and seeing some positive early signs, with solid revenue growth returning in late Q3 and momentum building as we enter the critical Q4 period for the media market."
The outdoor media market grew by 8% and captured a record 15% of advertising agency media spend, in the six months to June. Much of this increase is down to the 'digitisation' of media assets inside shopping centres, and roadside billboards. oOH! media owns Cactus Imaging, Australia's largest grand format advertising printer.
Lose some, win some
O'Connor is bullish about the next 12 months, saying: “We have a strong revenue pipeline, and anticipate securing at least $38 million in projected incremental annualised revenue from 2025 across a number of commercial contracts, including the renewal and expansion of Victoria’s Department of Transport and Planning, Australia’s single largest street furniture contract, and Melbourne Metro Tunnel greenfield sites.
“These are in addition to the $30 million projected incremental annualised revenue from contracts with Woollahra Council, Sydney Metro, and Sydney Metro Martin Place announced in 2023.
O'Connor adds: “While the overall media market remains challenging, the structural growth opportunity for out-of-home remains compelling.
“As the market leader, our focus remains on leveraging this opportunity to build profitable market share, while diversifying into new adjacent revenue streams, such as reooh (oOh!’s turnkey retail media solution), to deliver long-term sustainable earnings growth.”
