NZME digital revenue rises as firm ‘on track’ for targets
Online and other gains show firm’s resilience in tough times, says CEO
Media company NZME says it is focusing on keeping costs down amid an uncertain economic outlook but remains on track to achieve targets after reporting its fullyear result yesterday.
The company, which owns the Herald and other newspapers, radio stations including Newstalk ZB, ZM and The Hits, as well as the OneRoof real estate platform, reported fullyear operating earnings of $64.7 million for the year to December 31, in line with guidance issued in November, and a net profit of $22.7m.
Operating ebitda was down on the previous year’s reported $66m, but 4 per cent higher when that figure is adjusted to exclude the one-off impact of the sale of GrabOne in October 2021. Statutory net profit was 66 per cent lower, also due to the GrabOne effect.
Operating revenue climbed 7 per cent year-on-year to $364.6m and NZME noted that digital revenue was up 16 per cent.
The board declared a final dividend of 6c a share, payable on March 22, taking the total normal dividend for the 2022 financial year to 9c a share.
Other highlights included NZME growing its overall audience to 3.6 million people in 2022 with radio market revenue share reaching 41.4 per cent — the highest since 2016. Publishing subscriptions increased to 209,000, including 113,000 paid digital subs, and OneRoof showed a 30 per cent increase in digital revenue compared with 2021.
“We remain largely on track to achieve the targets we set out in our 2020 three-year strategy, which shows the strength and flexibility of our business and our team to get through difficult times,” said chief executive Michael Boggs.
“We made significant progress and delivered strong earnings results despite business confidence falling to historic lows, supply chain challenges, labour shortages, higher interest rates and inflationary pressures.”
Boggs said the company’s focus on digital transformation and diversification of its platforms continued to have a positive influence on business performance, with digital revenues becoming a more significant part of NZME’s total revenues.
Chair Barbara Chapman said NZME’s progress in digital transformation had been instrumental in continuing to drive growth across the business.
The company noted in its market announcement that it had made total distributions to shareholders of $43m during the year, including a share buyback totalling $17.6m.
That saw net debt increase by $31m, leaving a net debt position of $17.5m at year-end.
In terms of the outlook, NZME said it had been a soft start to 2023, especially given the subdued real estate market. “However, March 2023 is tracking to deliver growth over 2022,” the company said in its results announcement.
“Cost pressures remain across the business and we continue to be focused on substantially mitigating these through disciplined cost controls.
“There is uncertainty across the economy and the market, and we will update shareholders further at the Annual Shareholders’ Meeting on 26 April 2023.”
NZME’s cost pressures are reflected in operating expenses which climbed 7 per cent during 2022 to $299.9m.
People and contributors costs were 9 per cent higher due to people costs associated with the addition of
BusinessDesk, additional resources to deliver Government grant projects and a one-off $1000 discretionary bonus paid to each eligible employee.
Print and distribution costs were similar year-on-year, with increased paper and distribution costs offset by lower volumes.
Other expenses grew 14 per cent, reflecting the impact of the BusinessDesk and Radio Wanaka acquisitions, higher radio broadcast costs and the return to more normal levels of activity.
Cash flow from operations for the year was $37.5m, down from the previous year due to a decrease in working capital and higher amount of tax paid during the year. Capital expenditure of $10.7m was higher than the prior year, which was reduced due to Covid.
Expanding on the outlook, Boggs said the company was forecasting March advertising revenue to be up on the same month last year.
“One thing that makes us feel good about this is while the market has been tough we’ve actually been growing our share across all the platforms.
“On the other side the real estate market, which is one of our largest verticals from a revenue perspective, really dropped in the last quarter of 2022 — new listings coming to market were 25 per cent down on the year before. So that might take some time to recover.”
On rising costs, he said some of the most significant pressure was coming from print and distribution, with paper costs going up by as much as 50 per cent. But investment spending, including on new acquisitions, had also contributed to expenses.
“We have invested to grow revenue with the acquisition of BusinessDesk and investing in OneRoof and that’s paying off. We are pleased with the investments we’ve made and we are actually getting revenue returns from them. Some of those are about returns in future growth.”
We remain largely on track to achieve the targets we set out in our 2020 three-year strategy. NZME chief executive Michael Boggs