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SWM

Seven West Media Limited Reports - Weak FY19 results

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Seven West Media (ASX: SWM) is a leading Australian television broadcaster that operates an array of channels as well as magazine and newspaper brands. The Company is a key content producer and has the rights to broadcast the Australian Football League as well as the Olympics.

seven west media
(Photo by Brendon Thorne/Getty Images)

What are the results for SWM in FY19?

This morning (20th August 2019) SWM announced their FY19 results that are highlighted below:

  • Total FY19 loss after income tax of $444.4m.
  • Underlying profit after tax fell 7.9% to $129.3m.
  • EBITDA fell 10.1% to $243.6m.
  • Television and Newspaper licence impairments recorded at value of $573.7m.
  • Seven West Media does not plan to distribute a final dividend for FY19.

 

What are the drivers of this result?

Despite being Australia’s most popular broadcaster and owning a 40.3% share of commercial free-to-air viewing SWM reported significant impairments due to softer advertisement markets as well as increased external competition.

The Company has also failed to considerably increase revenue from its studio sector that rose incrementally by 0.9% as SWM attempts to produce content to compete in global markets. Furthermore, SWM’s news and publishing sectors reported a 9.0% decrease in revenue as increased competition reduce profitability. Seven West Media has however been successful in achieving a $38m reduction in operating costs for FY19.

 

What is the future outlook for SWM?

The Company has offered guidance for FY 2020 EBIT between $190-200m down from 212m for FY19 as advertisement revenue from metro TV is expected to continue to decline. SWM will attempt to secure additional broadcasting coverage with improved ratings, whilst also reducing its operating costs and running down debts.

 

How has the market reacted?

The share price of SWM has fallen 0.78% in response, to a share price of $0.382. Profit downgrades were expected by investors as SWM released revised guidance at mid-year FY19 accordingly this has already been considered in the share price. Seven West Media has also replaced its CEO with former channel Ten boss James Warburton earlier in the week to which the market responded positively jumping up to a share price of $0.42.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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