As I write, the ITV (LSE: ITV) share price is up 5.2% following today’s (7 March) release of the FTSE 250 company’s full-year results.
It’s no secret the stock has struggled in the last five years. During that time, it has lost 51.2% of its value. In the last 12 months, it’s down 26.9%.
But could its most recent update provide the TV stalwart with a much-needed boost?
An overview
So, what do its latest results tell us?
Well, despite a rising share price, total revenue for 2023 was down 2% to £4.3bn, dented by an 8% decline in advertising revenue to £1.8bn.
As a result, pre-tax annual profits slumped 41% to £396m from £672m the year prior. The firm pinned this down to “a challenging advertising market” amid a tough economic environment.
Digital boom
Nevertheless, what seems to have caught the market’s attention is the record revenues it saw in its production arm, ITV Studios.
For the year, total revenue grew 4% to £2.2bn. Moreover, adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) also jumped 10% to £286m.
That’s good news as the business continues to place more emphasis on diversifying its revenue sources. A strong performance from its online streaming platform ITVX drove 19% growth in digital revenues to £490m.
It’s also encouraging to see the solid progress it has made with its cost-cutting programme. Originally, it aimed for savings of £150m between 2019 and 2026. It now expects to hit that target a year earlier. By the end of 2023, it had delivered £130m of that figure.
The business highlighted it’s now in “the early stages of a new strategic restructuring and efficiency programme” that aims to “reshape the cost base, enhance profitability, and support the growth drivers of Studios and Streaming”. By the end of 2024, it expects this programme to have delivered incremental annualised gross savings of at least £50m per year.
Share buybacks
I’ve had ITV on my watchlist for a while now, in part due to its meaty 7.8% yield.
It paid an ordinary dividend of 5p a share for 2023, which is in line with what it paid out in 2022. However, after selling its 50% holding of BritBox International to the BBC for £255m, ITV will return £235m to shareholders via a share buyback scheme. The firm announced this will start today.
Time to buy?
So, its share price has struggled in recent times, but is now a smart time for me to think about buying ITV?
I’d say it might well be. ITV Studios remains on track to deliver total organic revenue growth of 5% per year to 2026. By then, the business is also confident of delivering at least £750m of digital revenues.
Recent trends have made it clear that traditional advertising is a flagging industry. But I like the moves the business is taking to diversify and move to a more digital future.
I’m hoping these results will provide ITV with some momentum going forward. If I had the cash, I’d strongly consider buying some shares.
