Investors Switch On As Nine Upgrades Earnings Forecast




Shares in Nine Entertainment Co edged up 2.7% yesterday after the company produced a second trading update in just over a month.

The shares ended at $2.415, up 2.7% which put Nine’s market value at $4 billion.

The company said the stronger earnings came as a result of continuing cost controls and higher advertising revenue in the lead up to Christmas.

The company told the ASX on Thursday that earnings before interest, tax, depreciation, and amortisation before specific items for the first half to climb by 40%.

That's 10 percentage points higher than what was indicated at the company’s annual general meeting in November.

Nine said it now expects revenue for the television division to be up 1% from the first half of last financial year. That compares to a flat forecast in November.

At the August results release the company said it was expecting a 15% fall in first-quarter revenues for the Free To Air TV industry, which is what occurred. But spending has risen sharply since then.

The company said it was not in a position to provide full-year guidance, but would have more visibility at its half-year results in February. The November update said Nine’s FTA revenue would be up at least 15% in the December quarter and the latest updates suggests something stronger.

“Nine’s December quarter is now expected to show growth in Metro FTA advertising revenue of almost 20% (previously ~15%), meaning that the Group’s Metro TV ad revenues in the December half are now expected to be up by around 1% on the prior corresponding period,“ Nine said in Thursday’s statement.

The company earned $251 million in earnings before interest, tax, depreciation and amortisation before specific items for the first half to climb. A 40 rise would see that rise to more than $350 million.

But looking into 2021, Nine, like so many other companies was coy.

"Nine continues to believe that, given limited visibility of the second half advertising market, it is not in a position to provide guidance on earnings for the full year. Nine expects to be in a better position to address this at the half year results in February,” the company told the ASX on Thursday.

The company joins Bapcor, Adairs and Beacon Lighting in revealing updated trading figures much stronger than expected.

But so far there’s been no trading update from Nine’s rival, Seven West Media. Its shares rose 5.7% to 27.5 cents in the wake of Nine’s strong update.

Nor has there been an update from Southern Cross Austero, which runs a regional TV business for Nine.

You would have thought the gains seen by Nine have flowed through to Southern Cross.