Shares in free-to-air broadcaster ITV (ITV) recovered from earlier heavier losses to trade down 1.7% to 119.4p as investors reacted to a mixed set of results.
Broadcaster ITV reported a fall in annual profit amid a ‘challenging’ advertising environment, but said annual performance was ahead of expectations, driven by a strong end to the fourth quarter and cost cuts.
Pre-tax profit fell to £325 million in 2020 from £530 million year-on-year as external revenue slipped 16% to £2.78 billion.
Revenue from the ITV Studios production business fell 25% and broadcast revenue was down 8% following an 11% fall in advertising revenue.
‘Due to the lack of video-on-demand volume drivers, such as Love Island, fewer soaps and no major sporting events, online viewing was down 5%,’ the company said.
Looking ahead, the company said the challenging environment would persist in the first quarter (Q1).
SOFT COMPARATIVES TO HELP IN 2021
Total advertising, which includes ITV channels, video-on-demand and sponsorship, was forecast to be down around 6% in Q1 with January down 9%, February down 15%, March up around 8% and April up between 60% and 75%.
The company was aiming to deliver around £100 million of annualised permanent overhead cost savings by 2022 (from 2019), compared to its previous guidance of £55 million to £60 million.
Shore Capital analyst Roddy Davidson commented: ‘We are encouraged to note the 2020 performance and positive outlook comments? although short-term advertising spend prospects remain hard to call.’
Numis’ Steve Liechti said the ‘shares are a liquid proxy to play better near term macro sentiment, especially vs easy 2Q comps, but we still see mid-term structural linear TV challenges’.
