REG - STV Group PLC - Trading Update

STVAnnouncement

09/11/2023 07:00

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RNS Number : 8647S  STV Group PLC  09 November 2023

 

 

 

9(th) November 2023

 

STV Group plc

 

Trading Update

 

 

·   STV operating profit* expected to be c.£20m in 2023, impacted by weak
national TV advertising in Q4 and the related effect on the rate of
commissioning in Studios

·   Group revenue up over 30% for first 9 months, more than offsetting
linear advertising decline

·   Digital and Studios revenue and operating profit* expected to be
materially up on 2022, underlining the continued success of STV's
diversification strategy

·   Studios operating profit* now expected to be at least £5m

·   Regional (Scottish) advertising expected to continue to outperform
National

 

Simon Pitts, STV Chief Executive, said:

 

"STV continues to make strong strategic progress despite a challenging linear
advertising and commissioning market impacted by ongoing economic uncertainty
in the UK.

 

Our diversification strategy delivered total revenue growth of more than 30%
for the first 9 months of the year as well as material profit growth in our
Digital and Studios businesses.

 

While the linear advertising picture is weaker than expected in Q4, VOD
advertising on STV Player continues to show good growth in 2023 and STV
regional advertising is once again outperforming national thanks to the
ongoing effectiveness of the STV Growth Fund.

 

We remain confident in our future growth prospects, with a strong content
line-up on STV and STV Player, a compelling pipeline of new programme ideas
across the expanded STV Studios, and a clear growth strategy, ensuring that we
are well placed for the economic recovery when it comes."

 

·    STV Group plc today announces that it expects operating profit* for
the year ended 31 December 2023 to be around £20m due to ongoing weakness in
the linear TV advertising and commissioning markets relating to UK
macroeconomic uncertainty.

 

·   STV's total advertising revenue (TAR) improved in Q3 and performed in
line with guidance at +3%, benefitting from a strong programme line-up
including the FIFA Women's World Cup and the Men's Rugby World Cup. As a
result, TAR for the 9 months to the end of September improved to -9% from -14%
at the half year.

 

·   As expected, year on year advertising performance in Q4 2023 has been
impacted by the presence of the FIFA Men's World Cup in Q4 2022. However, the
underlying linear advertising market has also been softer than expected due to
the ongoing economic uncertainty in the UK. As a result, we expect Q4 TAR to
be down around 15% and full year TAR to be down around 10% versus 2022, which
was the year of the second highest advertising revenue performance ever for
STV.

 

·  Within that, VOD advertising is up 14% for the 9 months to the end of
September, with 9 consecutive months of year on year growth, and we expect
STV's digital operating profit to be up at least 10% for the full year.

 

·    Regional advertising is down 10% for the 9 months to the end of
September, ahead of national linear advertising (-14%), and we expect Regional
to continue to outperform National for the full year.

 

·    STV Studios (including Greenbird) has continued its momentum in 2023,
producing a record 70 series this year while securing c.50 new commissions and
recommissions, despite the global commissioning market also being impacted by
the economic slowdown.

 

·    STV Studios revenue will nearly treble this year to £65-70m,
comfortably in excess of our £40m target, with operating profit of at least
£5m.  This is below previous guidance of £70m of revenue and £6-6.5m of
operating profit due to commissioning softness in the second half of 2023.
Within this Greenbird will contribute £15-20m revenue and c.£3m of profit in
the second half, broadly as guided.

 

·    Overall, STV Group revenue for the first 9 months of 2023 was £114m,
+32% on the same period in 2022 (+41% including Greenbird), comfortably
offsetting the decline in linear advertising revenue.

 

·   The combination of continued strong cash generation across the
business and management actions means that year end net debt will be between
£30-35m.  There continues to be strong focus on cost control across the
Group, with cumulative cost savings of c.£3.5m delivered across 2022 and 2023
so far, and the integration of Greenbird Media is on track, with synergies of
at least £750k p.a. from 2024 reconfirmed.

 

The information contained in within this announcement is deemed by the Company
to constitute inside information as stipulated under the UK version of the
Market Abuse Regulation (EU) No 596/2014 as it forms part of UK law by virtue
of the European Union (withdrawal) Act 2018.  Upon publication of this
announcement, this inside information is now considered to be in the public
domain.

ENDS

 

 

Enquiries:

STV Group plc:

Kirstin Stevenson, Head of Communications, Tel: 07803 970106

 

Camarco:

Geoffrey Pelham-Lane, Partner, Tel: 07733 124 226

Ben Woodford, Partner, Tel: 07790 653 341

 

 

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