The British television network ITV (LON:ITV) reported higher than expected earnings this morning. But the company says it is preparing for harsher economic climate in the coming months due to the UK’s Brexit vote.
Earnings
The network reported total external revenues growth of £1,503m, up 11% from Q1 earnings last year.
It stated double digit growth in Non-NAR revenue, which was up 26% to £874m from Q1 in 2015. ITV Studios total revenue grew by a total of 31%. Online, Pay and Interactive revenue was up 26%.
The Companies Chief Executive Adam Crozier pointed towards a strong performance in growing viewer figures. Viewer numbers on ITV’s main channel were up 7% while long form video consumption increased by as much as 50%.
Net Advertising Revenue was recorded flat at £838m. ITV Family NAR was flat in May but up 19% in June.
Future outlook
The outlook on total 2016 earnings was equally positive. ITV stated that it is on track to deliver double-digit total revenue as well as adjusted earnings before interest, taxes, and amortization growth. The company pointed towards its’ recent acquisitions as main driver of improved revenues.
The network acquired 100% controlling interest in UTV Limited in February this year. This strengthened its’ air business and enabled it to run its business more efficiently. Earlier this month it reached an agreement to sell UTV Ireland generating an income of 10 million [subject to regulatory approval].
There are however some concerns that the UK’s recent decision to leave the European Union will have a negative influence on growth.
ITV Family NAR is expected to record at a 1% loss over the first nine months of 2016 reflecting the expectation that companies may rein in advertising spending due to post-Brexit economic uncertainty and lower consumer spending.
Therefore, ITV stated it will target £25m in overhead cost savings for 2017 to guarantee that the firm can “meet the opportunities and challenges ahead”.
Adam Crozier, ITV plc Chief Executive, stated: “Our strategy of strengthening and rebalancing the business is clearly working and remains the right one for ITV. We have a strong balance sheet and the capacity to continue to invest behind our strategy, while at the same time delivering returns to our shareholders.”
Shares
ITV shares were under the hardest hit UK companies by the UK’s Brexit vote. Share prices dropped as much as 19.6% on the first day after the vote.
However, the better than expected earnings in Q1 and the positive forecast for the coming months have send share prices up 9.63% in morning trading today.
At 11.52am ITV.plc shares (LON:ITV) were trading at 202.53.