oOh!media's FY24 Trading Update: Navigating Market Challenges with Strategic Restructuring
OML (OML) Share Update December 2024 Wednesday 11th
oOh!media Announces FY24 Trading Update Amid Challenging Market Conditions
oOh!media Limited has released its FY24 trading update, highlighting modest revenue growth and strategic measures to address challenging market conditions.
Instant Summary:
- Q3 revenue growth of +2% compared to previous year.
- Q4 revenue growth expected between +3% to +6%.
- CY24 revenues projected at $633m - $638m.
- CY24 adjusted underlying EBITDA expected between $125m - $128m.
- Cost base reduction by over $15m planned for early 2025.
- Out Of Home (OOH) category continues to outperform the wider media market.
Revenue and EBITDA Projections
oOh!media has reported a 2% increase in revenue for Q3 compared to the prior corresponding period. Looking ahead, the company expects Q4 revenue growth to range between 3% and 6%, although this is slightly below initial expectations due to a slowdown in short-term booking activities.
For the full calendar year 2024, oOh!media anticipates total revenues to be between $633 million and $638 million, closely aligning with the previous year's figures. The adjusted underlying EBITDA for CY24 is projected to be between $125 million and $128 million, prior to accounting for restructuring and consulting charges.
Strategic Restructuring Plans
In response to the challenging media market conditions, oOh!media is taking decisive action to safeguard its market share and operating margins. A significant restructuring initiative is planned for early 2025, aimed at simplifying operations and enhancing performance. This restructuring is expected to reduce the company's cost base by at least $15 million, focusing on operating and non-rent costs.
Post-restructuring, oOh!media's operating cost base is anticipated to be approximately $150 million to $155 million in CY25. The company is committed to offsetting inflation impacts and driving revenue growth through additional business investments.
Market Position and Future Outlook
Despite the current market challenges, oOh!media remains confident in the long-term potential of the Out Of Home (OOH) advertising sector, which continues to outperform the broader media market. The company's market share in Australia and New Zealand has grown to 15.1% as of October 2024, reinforcing its leadership position.
oOh!media plans to announce its CY24 financial results on 24 February 2025, providing further updates on the business restructuring progress.
The announcement of modest revenue growth and strategic cost reductions is likely to have a mixed impact on oOh!media's stock. While the cost-cutting measures may reassure investors about the company's proactive approach to market challenges, the slower-than-expected revenue growth could temper enthusiasm. The company's strong position in the OOH market, however, provides a solid foundation for future growth.
Investor Reaction:
Analysts may view oOh!media's restructuring plans positively, as they demonstrate a commitment to maintaining market share and improving operational efficiency. The company's ability to adapt to market conditions will be crucial in sustaining investor confidence.
Conclusion:
Investors should keep an eye on oOh!media's upcoming financial results and restructuring progress. The company's strategic initiatives could position it well for future growth, making it a potentially attractive option for those looking to invest in the media sector.