oOh!media Faces Revenue Dip Amid Major Contract Loss

Highlights:

• Revenue Hit: oOh!media Limited (ASX: OML) reported a 3% revenue decline in H1 2024 due to losing a major contract with Vicinity Centres, resulting in a AU$37 million shortfall.
• Market Share Impact: The company acknowledged a temporary loss of market share but remains optimistic about future growth, expecting to add AU$38 million from new contract wins.
• Industry Outlook: Despite the setback, oOh!media anticipates high single-digit revenue growth for the out-of-home advertising industry for the rest of 2024, reflecting confidence in the sector's resilience.

Revenue Decline Due to Contract Loss

oOh!media Limited (ASX: OML), a leading player in Australia's out-of-home advertising industry, reported a 3% revenue decline in the first half of 2024, amounting to AU$288.3 million. This downturn was primarily due to the loss of a significant contract with Vicinity Centres, resulting in a AU$37 million shortfall. Despite this setback, the company still posted a profit of $18.2 million, though this was down 11% from the previous year.

Impact of the Vicinity Centres Contract Loss

The loss of the contract with Vicinity Centres, one of Australia's largest retail property groups, has created a substantial revenue gap for oOh!media. Vicinity signed a new contract with Cartology, a media subsidiary of supermarket giant Woolworths, in late 2023. This shift has temporarily impacted oOh!media’s market share, which the company described as a "short-term" issue.

Optimism for Future Growth

Despite the recent challenges, oOh!media’s Chief Executive Cathy O’Connor remains optimistic about the company's future. O’Connor anticipates high single-digit revenue growth for the out-of-home advertising industry throughout the remainder of 2024. She highlighted that oOh!media expects to recover with AU$38 million in new contract wins, offsetting the loss from Vicinity Centres. The company has also declared an interim dividend of 1.75 cents per share, reflecting its confidence in long-term growth.

Out-of-Home Advertising Industry Resilience

The out-of-home advertising sector has shown resilience as other traditional media channels, like television and radio, experience declining ad revenues. Out-of-home advertising now commands a record 15% of the total spend by Australia's advertising agencies, underscoring its growing importance in the media landscape. Despite recent setbacks, oOh!media continues to be a key player in this expanding market.

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