In This Article:
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Southern Cross Media Group Ltd (ASX:SXL) reported a strong financial performance with a 47% increase in EBITDA, driven by a 5% growth in audio revenue.
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The company achieved a significant reduction in net debt, bringing leverage down to 1.58 times, with further reductions expected by June 2025.
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Digital audio revenue saw impressive growth of 42%, contributing to a $9 million improvement in earnings for the half year.
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The company's focus on cost and capital discipline resulted in a 3% reduction in non-revenue related costs.
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Southern Cross Media Group Ltd (ASX:SXL) maintained its dominance in the Metro Radio 25 to 54 demographic, leading audience share for 28 consecutive National Metro Radio surveys.
Negative Points
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The board decided not to declare an interim dividend as the group prioritizes debt reduction.
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Corporate costs increased by $1.7 million due to contracted price increases and higher provisions for variable remuneration.
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Despite strong performance, regional radio revenues were flat, impacted by a weak retail SME market.
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The company incurred non-recurring costs of $7.1 million related to the restructuring of its operating model.
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The divestment of TV assets resulted in a net $3.8 million gain, but the transition involves ongoing exit costs and non-recurring items.
Q & A Highlights
Q: You're guiding non-revenue-related cost to be below 270. Can I just confirm, 270 was also the cost base in FY24 on an equivalent basis? A: That's correct, Brian.
Q: How would corporate cost change without TV going forward? A: As the business changes, we're looking to keep corporate costs, as well as every other part of our business, under control. I would expect corporate costs to be at least the same or lower in future years. With the sale of the TV business, we're a smaller business, so we need to adjust our cost base, particularly in the corporate area.
Q: So in essence for this year, the cost out initiatives will basically act to offset all natural inflation in the cost base. Is that the way to look at it? A: We've been very active in the cost out front during the first half and in recent weeks, putting in place cost initiatives to ensure the cost base will be lower than the $270 million of this year on a normalized basis. We're very confident in that because those activities have been completed.
Q: Can you talk about the shape of your digital radio cost base going forward? Is the circa 32, 33 million annualized non-revenue related cost base sustainable? A: We look at it as a margin business of about 25% on a sustainable basis. We are investing in the business, but if we can keep that cost base to CPI and make offsetting changes in broadcasts, that's what we would like to achieve. Listener digital audio is our growth engine, and we won't restrict investment in that.