ITV PLC (LSE:ITV) shares plummeted this morning despite record advertising growth in fears the group has reached a ceiling amid digital transformation.
The broadcaster grew revenues 24% over 2021 to £3.5bn as businesses poured money into advertising and marketing during the Covid pandemic, but shares fell more than 17% at opening this morning.
The group’s adjusted EBITDA rose 42% to £813mln, as its EBITDA margin rose 3 percentage points to 24%.
ITV enjoyed record advertising revenues as companies pushed marketing resources into homes and the company’s on-demand streaming revenues continued to gather pace, but headwinds lurk as the Covid restrictions are fully lifted and a cost-of-living crisis ensues.
“TV Studios has enjoyed both ratings and critical success and currently has around 500 programmes in production in the UK and internationally,” said ITV chief executive Carolyn McCall.
“Media and Entertainment kept viewers and advertisers alike happy with a compelling slate of entertainment shows and dramas and must watch sport across ITV's channels and streaming.”
Adjusted earnings per share grew 40% to 15.3p.
ITV also paid down £131mln of debt last year, leaving net debt at £414mln.
The company is engaged in a digital transformation to grab streaming revenues through its own services and a BritBox partnership with the BBC.
ITV expects its studios division to grow 5% per year through to 2026, with digital revenues doubling to £750mln by 2026, buoyed by a relaunch of ITVHub, its current streaming service, to ITVX.
ITV shares were trading at 91.52p at 08:09 GMT this morning, having closed at 110.10p yesterday.