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Seven West Media (ASX:SWM) trades higher on new earnings guidance

Media
ASX:SWM      MCAP $315.5M
17 June 2021 12:10 (AEST)

Seven West Media (SWM) is trading higher on the back of increased earnings before tax, interest, depreciation and amortization (EBITDA) guidance.

The media business has released a trading update, setting out an expected FY21 EBITDA of between $250 million to $255 million.

That figure is $10 million higher than previous analyst consensus, which estimated an EBITDA of $235 million to $245 million.

Along with the earnings upgrade, SWM also announced on Thursday it believed advertiser revenue this quarter would increase by 45 per cent.

The company said early indications were that this positive momentum in advertising revenue could continue over the September quarter.

In terms of ratings, Seven West said its TV stations had won seven out of 16 weeks so far, with the channel on track to win an eighth week as well.

The media company also reported growth in its digital businesses, with earnings from this division forecast to hit $60 million in FY21 — an increase of 130 per cent year on year.

Finally, SWM said it expects to end the 2021 financial year with $250 million in debt, but it says significant work has been undertaken to improve its balance sheet.

“Cost control remains an ongoing focus for SWM, with costs expected to come in line with guidance at the lower end of the range,” the company stated.

“Underlying inflation in the business is running at 1 per cent to 2 per cent per annum, although there will be incremental costs from Olympic Games Tokyo 2020
and the Ashes Test series in FY22, as well as a full survey year of content compared to COVID-impacted 2020.”

SWM shares were trading up 8.75 per cent following today’s announcement, trading at 43.5 cents each at 11:07 am AEST.

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