ARN Media has cut its profit outlook, saying the advertising market has experienced “significant softness” in the second half of the year, eating into the company’s revenue in October.
In a trading update to the ASX, the broadcaster said economic uncertainty and cautious client sentiment is weighing on advertising spend across the industry.
October revenue has dropped by about 10% and revenue for the second half is expected to fall by low double digits.
ARN’s transformation program has identified more than $40 million of cost out initiatives to be delivered over three years, of which $35 million has already been actioned.
This program, offsetting the rising cost of business, is also delivering savings, with costs for the second half expected to improve by 8%.
ARN expects full year EBITDA to be 25% to 27% below the last year.
“ARN has shifted its strategy to better align with evolving market dynamics and is encouraged by the progress of its turnaround strategy, which is delivering operational improvements and positioning the business for long term sustainable growth,” the company said.
Actions taken include simplifying the operating mode, cost cuts, improved leadership and digital capability, a reset of the commercial team, and divestment of noncore assets are underway.
“ARN is committed to continuing its evolution into an entertainment business that connects audiences and advertisers through audio, video, social and live experiences.”
The company had been forecasting revenue for the second half to December to be a low to mid-single digit decline compared to same period last year.
ARN posted a 7% drop in revenue to $142.3 million for the six months to June in a "slow market".
Growth of 21% in digital helped offset falls in metro (-12%) and regional (-5%).
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.