TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH OOHMEDIA (ASX:OOH) CEO, BRENDON COOK
Joining me today from outdoor media company, Media Group Limited (ASX:OOH) to discuss its first half results is CEO, Brendon Cook. Brendon welcome back to FNN. Now you’ve just reported a record first half result, your net profit was up 36% to $3.5 million. First up, how do you rate the result in what has been an especially difficult environment?Brendon Cook: Our net profit result has been outstanding. This comes on the back of revenue increase of 9% compared to the corresponding period; the industry growth in the same period was about 5.4% revenue. In terms of delivering a bottom line with that revenue growth that was great, we hope that revenue may have increased a little bit more than that, but maybe we’re ambitious.
Which areas of the business have contributed most?Brendon Cook: We have a very diverse portfolio mix in terms of outdoor assets. We are very big in big billboards in metropolitan area and regional areas, and in the retail environments with ads in shopping centres. So what we’ve seen is that all areas of the business have contributed, but probably the regional big billboards and the retail shopping centre signs have been the outstanding contributors.
How does this result compare to the same period last year?Brendon Cook: Well as I mentioned earlier the revenue is certainly up 9%, so that’s a great result on an industry of 5.4%. That’s translated into EBITDA increases of 7% on the corresponding period. And for us, this is significant in that we’ve now had seventeen consecutive six month halves of growth, including the GFC where we are one of the few traditional media companies that actually drew our revenues and profitability through the GFC. And we believe that the strength and diversity of our portfolio of assets will allow this to continue.
Now Brendon retailers are doing it pretty tough at the moment. How do you see this playing out and what does this mean for outdoor advertising?Brendon Cook: Our advertising mix is fairly heavily geared to grocery, liquor, pharmacy, telco, banking etc. And those big spending areas haven’t been hit as hard as from the retail slowness and clearly you’re seeing some slowness around fashion clients, some consumer electronic goods etc. So for us, any return to expenditure in those areas is more of an upside than currently being a downside, as our traditional retail areas are growing quite strongly.
Now group buying online sites they’ve been attracting a lot of attention these days, have you received any enquiries?Brendon Cook: One of the great strengths worldwide with outdoor advertising has been that in general, a web based business or online based businesses have been increasing their spend on outdoor advertising. And a lot of that’s to do with the way that the community now uses mobile phones, smart phones in particular.
So of course the group buying areas have been talking to us, clients like Spreets and Living Social have been using the medium, others will undoubtedly follow. And I think that as their customer bases mature through traditional search based methods, we tend to see that’s when the revenues increase quite substantially in terms of the usage of online businesses on outdoor.
We’re only a couple of months into your second half, but how are advertising rates and enquiries at this early stage?Brendon Cook: Q3 has been challenging, we’re probably in the mid to low single digit growth in revenue compared to the same period last year. However, the advanced bookings into the second half are into the mid and high digit growth compared to the same period last year. And our Q1 to 12 growth is already 1.3 million up on the same time last year.
And I think what we’ve seen is that the general climate of conservatism with the budgets hitting a little bit in Q3, the clients are now starting to look at the later quarters of the year and the first quarter of next year, and being much more positive about what they need to do to be successful in those periods.
So looking at the full year, what are you forecasting?Brendon Cook: I think at this stage, we don’t provide full forecast to the market at this early stage. However, clearly what we’re seeing is that as we reported just a minute ago, the last quarter we’re in the mid to high growth already in terms of our revenue compared to the same period last year. And we see no reason why that won’t continue even though there’s been the current economic news.
You mentioned conservatism earlier and we are certainly in a very volatile market at the moment. How well do you think OohMedia will be able to deal with this?Brendon Cook: One of the great strengths of the out-of-home industry is that it’s one of the few traditional medias that actually is growing. And that’s a lot to do with the fact that audiences are growing, in other words viewers are spending more time out-of-home or away from home. You combine this with the fact that we’ve developed products in the right areas to interact with the consumers and therefore, advertisers are starting to spend more money with outdoor advertising companies. So that leads us to an opportunity to get greater results for them.
Conversely we then have mobile media and mobile phones and the use of smart phones, and that’s allowing an interaction between the consumer. And we’re seeing that with record SMS redemptions etc. occurring where SMS numbers are used on an outdoor. We’ve now got QR codes and a whole lots of other technology changes that will actually benefit the medium in the long term.
And what’s your exposure like in the growth markets of Western Australia and Queensland?Brendon Cook: We’ve very dominant positions in the market like Queensland, both in the southeast corner which will obviously get a rebound as the stimulus of natural disaster redevelopment occurs. And we’re very big in north Queensland with our regional centres both on road and in retail. So Queensland very strong position and certainly in a strong position to take advantage of any upside. Western Australia has probably been one of our fastest growing areas in terms of development, both in the metropolitan and regional areas, both with big billboards and retail. And certainly we experienced strong occupancies and sales rates in those markets.
So I think that both those environments are really set to continue to grow; Western Australia probably continuing to grow. I think Queensland’s had some softer times since the earlier disasters in the start of the year, but that is starting to come back as that stimulus and insurance investment starts to apply to that market.
Thanks Brendon now to acquisitions, they’ve always been a big part of your growth. Is that likely to continue?Brendon Cook: Of course, acquisitions and organic development is really one of our great strengths. We’ve made fifteen acquisitions to date; every one of them has been value accretive in terms of how the business performs. And that’s seen with our current debt levels, which are running at about one to one, in terms of your EBITDA to debt ratios. So we really do know how to buy businesses and make sure that we can improve their performance.
Conversely we are also very strong at how we organically develop new locations or new opportunities and that just requires Capex funding, and you turn those into very profitable business opportunities. And both those core skills will still be key platforms in our growth strategies.
Last question Brendon. Where do you hope OohMedia will end 2012?Brendon Cook: Obviously there’s a calendar year coming that’s eighteen months away, but clearly we will continue to look at acquisitions in that organic development. I think investment in certain digital assets will be important. How we look to the future, of how we interact with consumers away from home is certainly one of our great growth strategies, and we’ll be certainly ensuring that our initiatives meet what advertisers require to give them some unique opportunities to interact with customers. So it will be improvements in what we currently do in all our product areas and the introduction of some new technologies and new methods to really interact with consumers.
Brendon Cook congratulations on the results.Brendon Cook: Thank you very much.
ENDS
