oOh!media’s results for the year to December were better than market analysts expected.
Revenue for the year was up 34% to $158 million.
And the March quarter was pacing 15% higher than the same three months 2021 and at 93% of pre-pandemic 2019.
Billboards are leading oOh!media out of the pandemic. The road (billboard) division was the standout performer in the just released full year results for 2021. Revenue was up 34% to $158 million.
CEO Cathy O'Connor told AdNews: "Brands are back advertising and consumers are getting about. I think after two years in hibernation, many advertisers are really wanting to get back out there and assert their positions in their marketplaces.
“And equally, car travel is reasonably non controversial, not really something that consumers are afraid to do. Some other forms of transport, and some other sort of environments like offices, can be a little more tentative.”
At Morningstar, equites director Brian Han: “The higher-than-expected 14% year-on-year growth in second-half revenue and its composition (street furniture, road) was eye-catching, and points to an advertising market that is shrugging off omicron concerns.”
He lifted the fair value estimate on oOh!media by 7% to $1.50 per share.
He also noted the building revenue momentum for the March quarter, pacing up 15%.
At the same time, that means operating costs are also rising.
“Critically, benefits of recent restructuring and heightened discipline are now offsetting inflationary cost pressures and labour retooling in readiness for the revenue snapback,” writes Han in a note to clients.
“As has been the case over the past 18 months, market appetite for a recovery story is palpable whenever signs of ‘back to normal’ emerge.
“However, we urge caution at current prices, as significant uncertainties still reign.”
Han also noted the company’s intention to lift capital spending, to $45 million to $55 million, up from the "bare-bones" $15 million per year of the past two years.
“We see the reinvestment phase as critical to riding the structural tailwinds of a sector primed to increase its share of the advertising pie to 7.3% in 2025, from 5% in 2020, according to PWC.”
Goldman Sachs analysts were also upbeat.
“In our view the revenue composition was strong, given core segments of St Furniture, Rail and Road came in much better than expected, whilst weakness was largely from other revenues and Locate.”
The analysts described the 2021 results as “solid” and reinforced their view that revenues could return to pre-covid levels through in 2022 despite the slower recovery from segments such as Fly/Locate.
They noted that since lockdowns ending in NSW/Victoria, the subsequent three months of core revenues were pacing at between 100% and 120% in January 2022.
Analaysts at Macquarie: ”OML remains a COVID recovery beneficiary in the near term. Longer term. OOH is likely to benefit from the pre COVID structural tailwind in share gains from other mediums.”
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