CEO James Taylor, just five months into the job at oOh!media, has found millions in savings from his investigations into operations at the outdoor media company.
Taylor, in a strategy and trading update, reported a 9% cut in headcount, a reduction of 82 roles, and $12 million in overall cost savings.
Most of this, about $10 million, is in operations, essentially the cogs (people and systems) of the company which keep the ads flowing and not the cost of rent on billboards.
His presentation to shareholders at the AGM could also be viewed as a message to those private equity firms looking for a bargain: He’s found more value.
Several suitors for oOh! are lined up looking for a takeover opportunity. The first offer at $1.40 was a 60% premium on the then closing price. But the shares had recently fallen 40% in a soft advertising market.
The board of oOh! thinks the company is worth more than is currently being offered.
Many market analysts agree, pointing to the company's strong position in a growing media segment (outdoor).
“OML (oOh!) is a structural growth business but its revenues (and earnings) are also cyclical,” Morgan Stanley analysts said in a note to clients.
“This year as the RBA has shifted from cutting to increasing cash rates, the economy has slowed and the key barometers of advertising health – such as consumer confidence, retail sales and business confidence – have all softened.
“Thus OML (and peers) have lowered their expectations for growth this year.
“On top of that, some company-specific factors have been at play …revenue hit from losing a large contract (Auckland Transport), a strategic misstep (reOOH closure) and a CEO change.”
It will take time for the economy and the advertising market to turn around and return to higher growth
The analysts think oOh! is likely to trade above the current offer price of $1.45 a share offer over the next 12 to 24 months.
Taylor’s strategy pitch and demonstrated cuts to overheads lends more weight to the board's position.
An initial review of operations in February identified opportunities within the $100 million of annual expenditure that covers nonrental cost of goods sold and capital spend.
“This is the first time an operating model review has been undertaken at oOh!, and it will drive margin expansion, cost efficiency and improved cash generation,” he told shareholders at the company’s AGM.
He wants to operate the business as efficiently and effectively as possible.
“It is, if you will, the connective tissue that links our market-leading network to our valuable customers,” he said.
“In a cyclical and high fixed cost business such as ours, optimising operating leverage is everything.
“Our job is to ensure wherever we are in the economic cycle, we are extracting maximum value from the cost base.”
He presented strategy as the connection between three pillars: network, operating and customers.
“Each pillar reinforces the other and together they define how we grow profitably,” he said.
“The back-end systems work we have undertaken will enable a much clearer understanding of the impact individual network decisions have on broader business returns.
“oOh! operates the largest OOH network in Australia.
“Over the remainder of FY26, we will build on this advantage with a far more sophisticated understanding of network-wide economics, ensuring we maximise the financial performance of this significant and interconnected asset.”
With customers, Taylor wants the business to be more responsive.
“Winning more business by being easier to buy, faster to respond and simpler to measure,” he said.
“We are making great progress here, and our pre-existing and funded plans to integrate our platforms have been accelerated.
“Pleasingly, and in part as a result of the first tranche of this work, our Australian business held share across the first four months of this year.”
A slide from Taylor's presentation to shareholders:
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