Outdoor advertising company APN Outdoor Group’s shares surged more than 8% yesterday at one stage yesterday after it said its full year 2018 earnings before interest, tax, depreciation and amortisation (EBITDA) guidance would be between $92 million and $96 million.
APN’s shares ended up 7.6% yesterday at $5.48 after it released the updated figures to the ASX before trading.
The company said the better than forecast performance was due to “revenue momentum” after a rough 2017 financial year. The annual meeting in late April was told that the company would provide an update in August – there was no hint of a possible earlier update.
The strong jump in profit was despite the update showed this profit measure rising by only 2% to just over 6% from the underlying EBITDA figure of 90.3 million reported for the 2017 financial year.
That is not a wholly convincing update.
APN said revenue growth for the first half of 2018 (June 30) is expected to be in the mid-single digits compared with the first half of 2017, and high-single digits when excluding the loss of the Yarra Trams contract in the December half of last year.
APN opted out of the contract last October, which was majority held by Here, There & Everywhere’s street furniture arm Adshel. Yarra Trams wanted to go with one contractor.
Since then APN says it has picked up or renewed new deals including Sydney Buses, Sydney Trains and Victorian Buses.
Recently, APN made a $500 million bid for Adshel, describing it as an “attractive complement" to the business with potential cost synergies.
This offer rivalled bids from competitor outdoor advertising company oOhmedia. The negotiations are continuing. Both companies dominate the outdoor industry and like their aborted merger idea in 2017, might find buying Adshel a but of a problem so far as the ACCC – the competition regulator – is concerned.
APN CEO James Warburton said the company was investing in data and technology to “add value to our product proposition”.
Mr Warburton has been in the role since January, after several years managing V8 Supercars and CEO stints at Channel Seven and Channel Ten.
”The out-of-home markets in both Australia and New Zealand have remained robust in recent months and pleasingly our reinvigorated approach to sales continues to gain momentum,” he said the statement.
