ITV profit plunges as crisis hits advertising and production

ITV's first-half profit was almost wiped out as the Covid-19 crisis caused revenue to plunge and exceptional costs to increase.

Pretax profit for the six months to the end of June dropped to £15m from £222m as revenue fell to £1.22bn from £1.48bn. Adjusted earnings before interest, tax and amortisation (EBITA) fell 50% to £165m.

Advertising revenue fell 21% to 671m as retailers and other companies cut advertising during the Covid-19 lockdown. Production income fell 17% to £630m as the maker of Love Island was forced to put 230 programmes on hold because of restrictions related to coronavirus.

The FTSE 100 company said about 70% of the affected programmes had restarted, including Coronation Street and Emmerdale in June with more to come. Advertisers are also starting to return but ITV said the outlook was too uncertain to provide financial guidance for the rest of 2020 including the important Christmas period.

Chief Executive Carolyn McCall said: "This has been one of the most challenging times in the history of ITV. While our two main sources of revenue - production and advertising - were down significantly in the first half of the year and the outlook remains uncertain, today we are seeing an upward trajectory with productions restarting and advertisers returning to take advantage of our highly effective mass reach and addressable advertising platform."

Operating costs declined to £1.19bn from £1.24bn but the group incurred an extra £54m of exceptional costs linked to Covid-19. In line with guidance the company paid no interim dividend.

Shore Capital analyst Roddy Davidson, who recommends buying ITV shares, said: "We are encouraged by the better than expected revenue and EBITA performance and signs of improvement highlighted in this morning’s release and by ITV’s financial strength. That said, the impact of Covid-19 on H2 (and particularly Q4) advertising spend remains a key short-term uncertainty."

ITV shares fell 3.7% to 58.64p at 08:28 BST.