Seven West Media joined the growing list of casualties on Tuesday morning, withdrawing its 2019-20 earnings guidance.
The withdrawal came a day after the shares closed at an all-time low of just 6.6%, much of that fall due to the company’s high debt and worsening trading over the last two years.
Seven said in February in its interim earnings release that it expected its underlying earnings before interest and tax to come in between $165 million and $175 million. Its EBIT for the six months to December 28 was $119.7 million.
The group’s underlying net profit after tax for the first half of 2020 was $69.3 million, down 22.5% on the previous year. Gross debt is well over $680 million.
The news had little impact on the shares, they edged up to 6.8 cents. Without significant debt reduction and a recap, the company will struggle to survive.
In the statement Tuesday morning, Seven explained:
“Due to the escalating uncertainty relating to COVID-19, a material fall in advertising market activity, and the suspension or postponement of productions and events, Seven West Media’s (SWM) visibility into future advertising bookings is now insufficient to provide meaningful earnings guidance for the remainder of FY20. Accordingly, SWM advises that it has today withdrawn earnings guidance for FY20.
The AFL has announced the suspension of all games until the end of May2020. While the International Olympic Committee’s (“IOC”) current position is that Tokyo 2020 is scheduled to proceed, the IOC has stated they are exploring a postponement scenario and the Australian Olympic Committee (“AOC”) and other national bodies have been more definite about a date change. There is no decision as at the date of this release but one is expected shortly.
“Such postponements are likely to result in rights payments by SWM being pushed back to reflect the revised scheduling; any adjustments remain subject to negotiation. However, postponements may also incur cancellation costs from underlying suppliers. Likewise, local productions are also facing challenges with travel restrictions and COVID-19 issues, and our teams are working tirelessly to deliver on commitments.
“Despite these challenging conditions, the company remains focused on executing its key strategic priorities outlined at its interim financial results including transforming the business and working down debt ahead of scheduled maturities in November 2021 and 2022.”
Rival Nine Entertainment withdrew its guidance a week ago, as have others. News Corp doesn’t issue guidance but its 61% real estate listings arm, REA, does and that no longer applies.
Outdoor media group, oOh!media yesterday asked for an extension of its trading suspension for another five days to allow talks to be wrapped up on a new financing arrangement. Shares in metro radio and regional TV group, Southern Cross, remain suspended while it asses the impact from COVID-19 and works out strategies about how to handle them.
While outdoor ad group, oOh!media waits to be recapitalised in some way, the self-styled “creative transformation agency” (it’s an old ad agency), WPP AUNZ yesterday canceled its final dividend for 2019 of 2.9 cents a share as well as the special dividend of 1.5 cents a share.
While the company says it is ”in a sound financial position”, the board decided this was prudent and cautious capital management to cancel the 4.4 cents a share payout.
The cancellation will see the company keep the $37.5 million that would have been paid out to shareholders. That was worth just over 10% of its market value yesterday of $298 million.
The shares slumped nearly 23% to 27 cents in the wake of the announcement.
