The Seven West Media Ltd (ASX: SWM) share price is racing higher today.
Shares in the All Ordinaries Index (ASX: XAO) multimedia company closed yesterday trading for 15.5 cents. As we head into the Wednesday lunch hour, shares are changing hands for 16.5 cents apiece, up 6.5%.
For some context, the All Ords is up 0.9% at this same time.
Today's outperformance follows the release of Seven West's full-year 2024 financial results for the 12 months ending 30 June (FY 2024).
Here are the highlights.
Seven West Media share price leaps despite falling profits
- Revenue of $1.42 billion, down 5% on FY 2023
- Earnings before interest, taxes, depreciation and amortisation (EBITDA) before significant items of $187 million, down 33% year on year
- Underlying net profit after tax (NPAT) after excluding significant items of $78 million, down 46%
- Costs of $1.23 million, up 2% from last year
- Net cash flow before temporary and capital items of $54 million, down 65%
What else happened during the year?
Judging by the above metrics and today's strong lift in the Seven West Media share price, the market had clearly priced in a difficult year for the company, which sees it exceeding expectations today.
On the plus side of the ledger, Seven West Media reports a 0.5% year-on-year increase in its total linear audiences. And digital minutes were up 39% from last year.
And while full-year costs were up 2%, costs in the second half of the financial year (H2 FY 2024) were 4% lower than the prior corresponding half-year.
The fall in the company's total TV market also showed some improvement in the second half. That declined 8.2% over the full year, but this fall moderated to 7.2% in the second half, an improvement from the 9.1% decline reported in the first half.
Seven West Media also noted its total TV revenue share increased by 1.7% over the year to 40.2%. This partially offset its market decline, with share growth achieved in every quarter.
On the balance books, the company's net debt increased to $301 million, driven by its ARN investment. Taking the ARN investment out of the picture, net debt fell by $15 million year over year.
What did management say?
Commenting on the results sending the Seven West Media share price flying higher today, CEO Jeff Howard admitted FY 2024 was "a tough result for SWM in a challenging market".
Howard added:
While growth in audience and revenue share partially offset the impact of the weak market, cost growth of 2% contributed to our EBITDA decline of 33%, reflecting the operating leverage in our business.
Following delivery of $25 million of cost out initiatives in 2H, we have taken decisive action to materially increase the program into FY25 to give SWM a platform to drive improved performance…
SWM continues to deliver market leading content across our linear and digital platforms that engaged and grew audiences during FY24. We achieved solid growth in our BVOD audience during the year, but we are still to fully capture the revenue opportunity.
What's next?
Looking at what might impact the Seven West Media share price in the year ahead, Howard said, "We are committed to driving improved profit and cash flow irrespective of market conditions."
He added:
Despite the advertising environment, we are focusing on capturing a greater proportion of available dollars in each market including a step change in our digital revenue performance. FY 2025 revenue will include the benefit of digital rights under the new cricket and AFL sport contracts.
We have also implemented an enhanced cost out program that will deliver a year-on-year decline in costs in FY 2025.
Seven West Media said it expected to achieve revenue share gains in FY 2025 from digital sports rights from November onwards.
Full-year costs are forecast to be $20 million to $30 million lower than in FY 2024.
Seven West Media share price snapshot
Despite today's welcome gains, the Seven West Media share price remains down 59% over 12 months.
