In an interim report released today, Seven West Media Ltd [ASX:SWM] posted a 7.2% increase on earnings before interest & tax, with total profit after tax rising 5.2% to AU$100.7 million.
Margins increased from 18.9% to a cool 21.8% showing the company can better manage its costs, which is further illustrated by total group costs dropping 13.8% pcp.
Notably, revenue decreased in the reporting half from AU$903.3 million in the first half of 2017 to AU$809.4 in the first half of 2018.
What has changed for Seven West Media?
The Aussie advertising market grew 0.8% in 1HFY18 pcp, with metro TV advertising spending up 1.5% to AU$1.5 billion. SWM claims that while competition and challenging trends are facing them, their controlled assets continue to outperform their peers’.
Seven West forecasts their digital revenues will grow on target to double year on year.
In reaffirmation of the group’s strategy, CEO Tim Worner stated:
‘We have intensified our focus on the core with ratings, revenue and costs the priority.’
Costs over the 18-19 financial years are expected to be reduced by AU$125 million.
Warner went on to restate the guidance issued at the recent AGM for EBIT to remain between AU$220-240 million.
Looking forward for Seven West Media
The company announced a temporary dividend suspension in order to remain flexible through the relaxation of media ownership legislation.
Seven West Media’s strategic goals include capitalising on investment opportunities in ‘adjacent verticals’ to leverage audience and brands. This refers to acquisitions of other businesses in order to expand.
This is an encouraging sign of the company’s focus on organisational growth.
At time of writing Seven West Media is up 17.65% to AU$0.60.
Editor, Money Morning
Junior Analyst, Money Morning
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