Digital advertising group Ocean Outdoor today reported a dip in revenue for the first quarter of 2020 as demand for advertising continues to nosedive amid the coronavirus crisis.
The billboard giant announced that group revenue sank four per cent to £27.4m in the first quarter of 2020 on a pro-forma basis, down from £28.5m in the same period last year, as coronavirus swept across the globe and social distancing measures reduced outdoor footfall.
Ocean noted that the group’s performance in the Nordics and the Netherlands was particularly affected as it suffered earlier from the pandemic.
However, it noted that the firm’s UK results were flat for the period, and that the group maintained a strong balance sheet with cash position of £32m, and liquidity of £67m.
Why it’s interesting
It comes as a blow to the out-of-home advertising firm after a “transformational” set of results in 2019 following a string of acquisitions.
Ocean Outdoor’s full-year group revenue surged 14 per cent to £141.3m in 2019, marking a £16.8m increase since 2018, while Ocean UK and Ocean NL’s combined revenues hiked 14.3 per cent to £98.3m over the period.
Ocean, whose out-of-home advertising sites in the UK include London’s iconic Piccadilly Lights and Westfield, last year expanded its presence in Europe by entering six new countries — the Netherlands, Sweden, Denmark, Norway, Finland and Germany.
It acquired Dutch companies Ngage Media and Interbest for a combined cash consideration of £44m, and added a further eight screen locations in the Netherlands through its acquisition of DKTD Media.
However, the firm today said it had been forced to take decisive steps to strengthen Ocean’s financial position and protect staff in response to Covid-19.
Ocean has so far cut all discretionary spending, reduced employee working hours and furloughed staff in a bid to stem the fallout from the virus.
In March, the firm entered talks with lenders to offset the drought in demand for advertising as a result of the pandemic. The group said it had taken a series of steps to shield the business “from a rapid deterioration in media and advertising spend”, including arranging £35m term loan and revolving credit facility.
This included £25m of government money from chancellor Rishi Sunak’s Coronavirus Large Business Interruption Loan Scheme. The group said it is also utilising newly-introduced government schemes including tax deferrals.
Ocean last year boasted an exclusive partnership with ITV to broadcast live content and highlight packages for the Rugby World Cup in 2019, but this year has been affected by the cancellation of most sporting events.
Rival outdoor ad giants including JC Decaux and Clear Channel have warned that the pandemic could result in heavy damages to revenue.
In April, Ocean’s UK and Netherlands branches launched a £10m fund offering free ad space to retailers and small businesses hardest hit by the coronavirus crisis.
The support fund, administered in partnership with local authorities, has so far helped more than 400 small to medium-sized businesses across the two countries.
What Ocean Outdoor said
Ocean chief executive Tim Bleakley said: “As the Covid-19 situation unfolded, the strategy has been to enhance both Ocean’s and the wider industry proposition by using our screen networks in innovative ways to assist and inspire citizens in the countries where we operate.”
“We were pleased with a strong set of 2019 results which reflected the positive momentum we had built right across the group… This work has helped us to safeguard the Ocean philosophy and the medium we represent, which builds a strong foundation for us to navigate the present Covid-19 situation.
He added that initiatives such as broadcasting extracts of the Queen’s speech on the Piccadilly Lights and the creation of a Public Art display across UK city centres for the National Gallery “generated national and international multi-media headlines and demonstrates Ocean’s societal role.”
Bleakley said: “It is these unique attributes and the capabilities of the digital out of home medium that Ocean continues to showcase that give me confidence in our ability to bounce back stronger.”