ITV shares rose 2.5% to 73.2p in early morning trading on Thursday following a reported an 8% revenue growth to £1.6 billion, with a 16% total ITV Studios revenue climb to £927.
The entertainment firm announced a 4% uptick in Media and Entertainment revenue to £1 billion, along with a 5% total advertising revenue increase and a 20% rise in digital advertising revenue.
However, its rising revenue was offset by scaled-up investment in ITV’s new ambitious streaming platform ITVX, which is projected to deliver at least £750 million in digital revenues by 2026.
ITV mentioned a group adjusted EBITA of £228 £318 million from £327 million, alongside a pre-tax profit of £219 million against £133 million year-on-year.
“Profitability is being supported by costs cuts, which can’t continue forever. Increased health and safety protocols from Covid are looking pretty permanent, and sets are clunky and expensive places to run at the best of times,” said Hargreaves Lansdown equity analyst Sophie Lund-Yates.
“The ambition is an admirable one, so now the scrutiny turns to one of execution. The division is likely to enjoy growth, but profits are less likely to shoot the lights out.”
The group commented it was “mindful of macroeconomic and geopolitical uncertainty”, and anticipated a total advertising revenue drop of 9% in July and 18% in August from the last year, in line with management expecations.
ITV confirmed the fall reflected the tough comparisons with the year before, when the firm broadcast the Euros.
“While grandiose ideas are churning over in the background, ITV is still reliant on traditional advertising revenue in its broadcast business,” said Lund-Yates.
“Supercharged efforts to boost digital TV is helping here, but old-school real-time TV ads still play a big part.”
“The group’s responsible for smash hits like Love Island and also sees marketing teams queuing up when it broadcasts headline sport. But demand is bumpy at best, that’s unlikely to change.”
The company noted a statutory EPS of 4.8p from 2.4p the year before.
ITV reported a dividend of 1.7p per share for the interim term, and reiterated its commitment to a minimum total dividend of 5p for FY 2022.
