NZME bucks media trends, predicts earnings growth

NZME is forecasting earnings growth in 2024, supercharged by the performance of property portal OneRoof — a standout result in light of massive cutbacks in the wider New Zealand media industry.

In a week that has seen the announced full closure of Newshub and TVNZ shows such as Sunday and Fair Go, NZME — the owner of the NZ Herald, Newstalk ZB, a suite of entertainment radio brands and OneRoof — told shareholders yesterday it was predicting growth in its earnings before interest, taxes, depreciation and amortisation (Ebitda) this year.

At the NZME annual shareholders’ meeting in Auckland, NZME chair Barbara Chapman and chief executive Michael Boggs described the operating environment as “challenging”.

However, Boggs said advertising revenue in the first quarter of 2024 had been stronger for NZME, with 4 per cent growth year-on-year. This was reflected in the company’s increased overall market share, he said.

Much of NZME’s success in early 2024 was down to the performance of OneRoof.

“OneRoof has performed very well in the first quarter, with new real estate listings coming to market having recovered to historical averages,” said Boggs. “OneRoof’s revenue growth is outperforming listings’ market growth and we are pleased to be delivering strong profitability.

“We remain cautious due to the current operating environment. However, we expect NZME 2024 Ebitda in the range of $57 million to $61m, resulting in growth compared to last year.”

Ebitda in 2023 was $56.2m. NZME said OneRoof had enjoyed “significant” digital revenue growth of 69 per cent year-on-year for the first quarter of 2024.

OneRoof’s Ebitda for the first quarter was $1.4m — “a significant improvement from the loss in last year’s first quarter and full year”.

Boggs said the strong growth was a “powerful demonstration” of OneRoof delivering on its potential and “supported by a recovery in the residential real estate listings market after last year’s downturn”.

It was also being driven by continued improvement in the number of residential for-sale listings upgrades.

“OneRoof is well placed to maintain its positive momentum in revenue and profitability, regardless of how the real estate market performs this year,” Boggs said. “With more agents and vendors than ever before seeing the value of OneRoof’s offering and with a continued focus on increasing listings upgrades, we are capitalising on OneRoof’s potential to deliver significant growth.”

According to independent research commissioned by NZME, the company now reaches nine out of every 10 Kiwis each month.

Boggs said the company was also proud it now had a digital publishing business that could fully fund NZME’s newsroom and journalistic endeavours.

There were now 130,000 digital subscribers across NZME’s publishing brands (including NZ Herald, BusinessDesk and Viva), with a target of 190,000 by the end of 2026.

Chapman said the board was committed to maximising distributions to shareholders within existing debt facilities and in line with the company’s dividend policy.

“For the 2023 year, dividends totalling 9 cents per share have been paid, made up of a 3c interim dividend and a 6c final dividend paid on March 20 this year,” Chapman said.

“With net debt of $18m at the end of December, the leverage ratio was at the low end of the target range. However, net debt is now at the upper end of the range following the payment of the final dividend in March.

“It remains an uncertain operating environment and the board believes it is appropriate to continue to operate at the lower end of the target leverage ratio.

“In the absence of compelling investment opportunities, we expect to be below the lower end of the target leverage ratio at the end of 2024.

Three NZME directors, Guy Horrocks, Carol Campbell and David Gibson, were re-elected to the board.