This week, oOh!Media Limited (ASX:OML) announced its financial results for the calendar year the ended 31 December 2022 (CY22).
oOh! delivered an 18% increase in revenue to $592.6 million. Revenue in Road and Retail grew above pre-pandemic (CY19) levels while second half revenue in the Fly format grew 78% over the first half as airline capacity continued to increase back towards pre-Covid levels.
Operating leverage, combined with ongoing operational discipline, delivered an uplift in earnings with Adjusted Underlying EBITDA 3 increasing by 64% on the prior year to $127.1 million.
Overall, oOh! delivered an Adjusted Net Profit After Tax of $56.2 million and declared a final dividend of 3.0 cents per share, bringing the full year dividend to 4.5 cents, fully franked.
Mediaweek spoke to oOh!Media chief executive officer, Cathy O’Connor, about what the results mean and how the company will build on them.
Some of the major talking points of the CY22 results include a reported net profit after tax of $31.5 million compared to a loss of $10.3 million in the prior year, and net debt at 31 December 2022 of $32.9 million compared to $63.5 million at 31 December 2021.
For O’Connor, the driving force behind these results is economic recovery post-pandemic, and the increasing interest in Out of Home from advertisers.
“We’ve got a business that has gone through the pandemic to the other side, and is now really starting to go back to the position of 2019, where Out of Home was emerging as the future-focused, established broadcast medium, with growing audiences and increasingly a digital offering. It’s just a recommencement of that trend.
“You can see as the revenues have recovered – and we grew our revenue by 18% last year – that the operating leverage in the business demonstrates the ability to grow profitability at an accelerated pace. All of the things that play into our sector growth – new measurement systems, new digitisation, increasingly programmatic offerings, and new creative executions – all those things are increasing the interest and desirability of the medium, and winning Out of Home a larger share of advertising spend.”
As proof of this, O’Connor says that she points to SMI to highlight the structural shift towards Out of Home.
“In 2022, the sector increased its share of total media in SMI by 1.9 percentage points to 12.4%, and if you look at Q4 alone it was a 13.7% share. The momentum is with Out of Home, and that’s continued into Q1. If we look at our pacing, year on year at 8%, it appears far more positive than some of the indications that have been given by the listed radio and television companies that have reported thus far.”
When asked what the team at oOh!Media would be focussing their efforts on over the next calendar year, O’Connor says that the main point will be “increasing digitisation of our assets.”
“We announced 477 new digital assets were created in 2022, including 31 new digital billboards, and we’ve just signed a representation agreement with EiMedia which brings another 17 large format digital billboards into our portfolio in Sydney. We’re positioning ourselves well for the momentum in billboards.”
Building on that, oOh! will be concentrating on releasing its Full Motion Video network, oOh! Motion, and 3D Anamorphic offering, oOh! Dimensions, to the market later in the year. The year will also see preparation for MOVE 2.0 to hit the market in 2024.
The momentum of all of these projects alongside the CY22 results paints a bright future for oOh!Media.
“We’re taking those products to market in a considered way, and in a way that helps advertisers understand the how,” says O’Connor. “oOh! Motion and oOh! Dimensions will come to market in Q2 and Q3, we’ll make sure that we’re bringing the education piece along with those innovations.
“We’ll be trying to demonstrate the ways in which other marketers are using Out of Home through really strong case studies and ROI and effectiveness studies – all of those things are important to make sure that we’re bringing the market with us, and that those innovations can convert to measurable results for advertisers.
“We’ve got a lot to look forward to, and a lot to be confident about.”
For O’Connor, the pitch to advertisers when it comes to oOh!Media is that the Out of Home sector represents stability in an uncertain economic climate, and oOh!Media is the “largest and most diverse player in the sector.”
“We like to say when the sector grows, we all grow. The pitch is very simple, it’s a common sense pitch about fragmentation in media. The trends are with Out of Home in terms of its mass reach, its increasing digitisation, and its ability to provide a mass reach audience – which is not in decline from streaming platforms – at a cost effective price point. There is a lot of opportunity, both creatively and in terms of the various formats and environments that we operate in.
“It is all of those bases which make Out of Home the best positioned of the established media to continue to grow with advertisers into the future.”