Nine downgrades earnings as weak property market hits Domain

Media giant Nine Entertainment Co has downgraded its earnings expectations for the first half of the fiscal year as weaker-than-expected property listings knock the bottom line of its real-estate listings portal Domain.

Domain announced in a statement on Tuesday that the property market had deteriorated since its annual general meeting in November, but said that a planned reduction in costs and an increase in the use of home loan and agent solutions products would offset the impact of a more challenging environment.

Australia’s falling property market is starting to knock local media companies.

Property listings fell 16 percent in October and 22 percent in November, and December is experiencing an earlier-than-usual drop in listings. The fall has impacted Domain’s parent company, Nine, which has lowered its earnings guidance to $370 million for the half-year (from an earlier range of between $380 million to $400 million at its AGM).

Nine, which owns a range of television, radio, and publishing assets including The Sydney Morning Herald and The Age, said its half-year result was dragged by the conditions affecting Domain’s performance. It said Domain’s cost savings initiatives – between $21-$26 million for the financial year – were not enough to prevent a drop in earnings.


“Whilst the advertising market has become increasingly challenging, the operating performance of Nine’s wholly-owned businesses for the first half continues to be in line with previous guidance and company expectations, with share gains and ongoing cost discipline offsetting the impact of the softening market,” it added.

Domain said its earnings [before interest, tax, depreciation and amortisation] would be around $48 million for the first half, but would improve materially before the end of the financial year from increased revenue in residential depth contracts, Insight Data Solutions and Domain Home Loans. Costs for the full year are expected to be between $250 million and $255 million, down from previously forecasted expectations of between $275 million and $280 million.

“Given the anticipated H2 revenue upsides and the cost benefits delivered, FY23 EBITDA margins are expected to see a low single digit percentage point reduction versus FY22…consistent with the AGM update,” the company said.

Domain shares closed at $2.85 on Monday, down one percent. Nine shares sit at $1.98 each.

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