APN Outdoor's failed merger bid with oOh!media has added to a 19 per cent dent in its first-half profit, despite strong digital growth and a welcome bump from its billboard business.
The higher-than-expected advisory costs for the merger, which was abandoned in May, contributed to a $4.1 million cut in net profit to $15.8 million, while first-half revenue climbed 7.8 per cent to $162.3 million, APN Outdoor reported on Monday.
APN Outdoor said the failed attempt to create an Australian outdoor mega-advertiser had cost the company $3.4 million.
The Australian Competition and Consumer Commission flagged concerns over the proposed $1.6 billion merger with oOh!media, leading to the companies ending talks.
Outgoing APN Outdoor chief executive officer Richard Herring said the merger costs had been expected.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"These were advisory costs - costs we knew going into the deal would be expensive - and they were," Mr Herring said in a media briefing.
Mr Herring, who will retire from his role as CEO on September 30, said the combination of additional digital screens and market growth contributed to the uptick in half-yearly revenue.
"Digital screen revenues continue to represent over one-third of group revenues, and will continue to grow in line with demand and the Company's focused growth strategy," Mr Herring said.
With 16 new screens added to APN Outdoor's portfolio over the first half, digital revenue expanded by 27 per cent - from $47.5 million in the first-half of 2016, to $60.1 million, while billboards secured APN Outdoor's strongest returns, up 20 per cent year-on-year, to $84.6 million.
"Notwithstanding the increase in digital screens and associated revenue, classic billboard revenue was resilient and performed better than expected in the first half," Mr Herring said.
Underlying earnings before interest, tax, depreciation and amoritisation (EBITDA) grew slightly less than revenue, up 7 per cent to $37.2 million, after the business invested further in staff and marketing.
APN Outdoor is now anticipating 2017 underlying earnings to be in the range of $90 million to $95 million.
"Over the longer term, we see digital sites continuing to deliver greater yields," Mr Herring said.
At 1155 AEST shares in APN Outdoor were 22 cents, or 4.7 per cent, higher, at $4.95.
DIGITAL DELIVERS AS MERGER BID COSTS WEIGH ON APN OUTDOOR
* Net profit for half-year to June 30 down 19.3 per cent to $15.76 million
* Revenue up 7.8 per cent top $162.28m
* Interim dividend 6.7 cents, fully franked, up from 6.5 cents in H116
