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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Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.