STV on track for record advertising result after surprise Covid rebound
In a trading update to investors, the Glasgow-headquartered group said total advertising revenue for the full year is up between 22 and 24 per cent on 2020. The fourth-quarter performance has been stronger than expected, despite tough comparators, the firm added.
The 2021 advertising performance would represent growth of more than 10 per cent compared to financial year 2019, pre-pandemic.
STV expects regional advertising to finish the year strongly, up around 20 per cent for 2021, despite only dropping 5 per cent during 2020 when the pandemic was at its height, and 15 per cent ahead of 2019.
The group also announced that its STV Growth Fund will be increased from £20 million to £30m in 2022. Since launch in 2018, the fund has allocated £15.7m across more than 700 deals with Scottish small and medium-sized enterprises (SMEs), attracting in excess of 300 new advertisers to television.
Previous guidance that the group’s studios business is on track for its best ever financial performance in 2021, with full-year revenue of £20-25m, has been reaffirmed.
Chief executive Simon Pitts said: “The speed and scale of the advertising recovery in 2021 has far exceeded our expectations and underlines the enduring power and relevance of high-quality video advertising.
“2021 will deliver STV's highest ever advertising revenues, with brands choosing broadcast and video on demand advertising to boost their post-Covid recovery due to its unrivalled levels of trust, brand safety and value.”
He added: “I'm very proud that our STV Growth Fund has now enabled over 300 Scottish SMEs to access TV advertising for the first time, including around 150 since the start of the pandemic.”
Roddy Davidson, an analyst at brokerage Shore Capital, noted: “STV has published a very encouraging trading update confirming that it is on track for a stronger than expected Q4 performance and a year of record revenue across both its advertising and production activities.
“Pleasingly, this release also reiterates previous full-year revenue guidance of £20m-£25m for STV Studios and flags that the value of the STV Growth Fund will increase to £30m.
“This is good news as the latter has proved a highly effective mechanism for stimulating advertising spend from SMEs - with 700 deals struck and over 300 new advertisers attracted to TV since its launch in 2018.”
In September, STV revealed that it had swung to a first-half profit, hailed continued record viewing figures and snapped up a stake in a Brighton-based production company.
On key financial measures, the group posted a 35 per cent year-on-year hike in revenues to £60.3m, generating a profit before tax of £8.5m, compared with losses of £4.9m a year earlier. An interim dividend of 3.7p per share was declared, up from 3p at the same stage last year.
Pitts said the firm was emerging from the depths of the pandemic “stronger than ever”, with a cautious but generally upbeat outlook for the remainder of the year.
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