NZ Herald owner NZME exceeded its guidance for the year to December 31 clocking up operating earnings of $67.3 million and signalling a return to dividends.
The media company had forecast operating ebitda of $63m-$66m including $8.6m accessed from Government Covid-19 wage subsidies.
Today it reported a statutory net profit of $14.2m compared to a net loss of $165.2m in 2019 when it suffered impairments to intangible assets.
The underlying earnings figure of $67.3m was a 3 per cent increase on the previous year.
NZME shares gained 2c to 92c following the result. The stock has climbed from a low of 18c in April.
NZME, which owns the New Zealand Herald, Newstalk ZB, the OneRoof property website and a suite of entertainment radio stations including ZM, The Hits and Hauraki, reported operating revenue of $331.2m, down 11 per cent on the previous year.
The drop in revenue reflected the significant impacts of Covid-19 on advertising, NZME said. Advertising revenue fell 16 per cent to $218.9m.
During the year the company reduced net debt by $40.9m to $33.8m with its leverage ratio falling to 0.6 times operating ebitda at balance date.
As previously signalled, NZME said it expected a return to dividend payments this year.
"Given the significant reduction in debt, and based on this outlook and NZME's
capital requirements, the board expects to be able to return to payment of dividends
in the second half of 2021."
Chairwoman Barbara Chapman pointed to the company's navigation of Covid-19 challenges as key to delivering earnings growth.
"Our people stayed steadfastly committed to our purpose of keeping Kiwis in the know. NZME's journalism and entertainment excelled across all our print, digital and radio platforms. Our teams of entertainers did what they do best: keeping Kiwis connected and their spirits up."
NZME reported further momentum in its key strategic priorities with year-on-year growth
in radio revenue market share and digital listening via its iHeartRadio platform.
The NZ Herald Premium news subscription service grew to 102,000 subscribers, including more than 53,000 paid digital-only subscribers generating revenue of $6.6 million in 2020.
Real estate platform OneRoof held the number one position in residential for-sale real estate listings in Auckland for most of 2020, with more than 89 per cent of listings in New Zealand as at December 31, 2020. The portal contributed $4.3 million of digital classifieds revenue in the year.
NZME's revenue market share grew across its key channels, including 40.4 per cent in radio advertising, 47.1 per cent in print advertising and 24.3 per cent in digital display.
"The initial shock of Covid-19 on NZME saw advertising revenues across our business fall by close to 50 per cent," chief executive Michael Boggs said. "But Kiwi business owners understand the value of staying engaged with their audiences and as New Zealand moved through the crisis phase of the pandemic, advertising spend steadily returned.
"It's very pleasing that we ended 2020 with advertising revenue in some areas approaching levels similar to 2019," said Boggs.
At an investor presentation in November, NZME talked of shifting its strategic focus to expanding the Herald, increasing radio dominance and accelerating real estate portal OneRoof's growth.
Today NZME reported further momentum in its key strategic priorities with year-on-year growth in radio revenue market share and digital listening via its iHeartRadio platform.
"The reshaping of our business in 2020 means NZME remains in a good position as the ongoing impacts of Covid-19 are felt into 2021 and possibly beyond," Chapman said.
"As we have stated previously, the government wage subsidy supported the production of quality journalism and broadcasting during an extremely difficult period and helped NZME retain roles that are now supporting the delivery of our strategy."
NZME's share price has climbed from a low of 18c in April to above 90c this week for a market cap of $180m.
San Francisco-based Osmium Partners has built up a 17 per cent stake, which founder and managing partner John Lewis says is a long-term holding.
Commenting on the outlook, Boggs said while business confidence has improved significantly, advertisers remain cautious regarding their placement of advertising, with more bookings being made 'in the month' than previously experienced.
"On the basis of continued improvement in economic conditions, Covid-19
recovery, improved revenue trends and permanent cost reductions NZME would
expect profit growth in 2021.
"Even with all that Covid-19 throws at us - sitting still simply isn't an option. Media is a perpetually fast moving and hyper competitive environment. Continually fine tuning what we do and how we do it is vital to ensure NZME continues to grow audiences, continues to exceed the deep audience engagement levels our commercial partners seek and to ensure we grow shareholder value," said Boggs.