Shares in oOh!media dropped hard after a trading update by Australia’s largest outdoor media player described the advertising market as “softening”.
At the close the shares were down almost 24% to $1.24 and had dipped below $1 at one stage during trading.
Outdoor media has been surging since the end of restrictions during the pandemic.
In February oOh!media reported revenue jumping 18% to $592.6 million for the full year to December. Statutory net profit after tax was 400% higher at $31.516 million, compared to $10.28 million loss in 2021. Adjusted net profit after tax was $56.2 million, up 343%.
The latest share market reaction comes after both Seven West Media and Nine reported falling advertising revenue.
oOh!media followed with its own trading update.
“Softening media market at the end of Q1 (March quarter) and into Q2 (June quarter) due to a decline in the broader macroeconomic environment in Australia and New Zealand,” oOh!media told investors at a Macquarie Bank conference.
March quarter revenue grew 3%, with trading softening significantly in March with a decline in short term in-month bookings.
oOh!media, like the rest of the media industry, reportedly weak government advertising spend.
Road was up 7% and Fly 88%.
However, street revenue continued to be impacted by the launch of City of Sydney.
April media revenue is “particularly soft,” pacing at -10% compared to the same month last year.
However May and June media revenue stronger, with the June quarter currently slightly ahead.
Analysts described the market reaction as “excessive” and placed the shares at an attractive price.
Brian Han, director at Morningstar, says oOh!media has the balance sheet to weather near-term cyclical headwinds.
“Revenue recovery was never going to be smooth this year, and the prior-year comparisons are especially tough early this year (high-teens growth the first four months of 2022).
“oOh media's 3% revenue growth in the March quarter was below the 12% for the outdoor market.
“However, most of that underperformance can be attributed to the Street Furniture unit (affected by QMS' City of Sydney contract launch).
“Critically, outdoor is the only traditional advertising medium that is growing this year.
"There are long-term structural tailwinds behind it, oOh media is the clear market leader (40% share) and we continue to forecast solid earnings growth longer-term.”
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