Earnings Release • Nov 8, 2013
Earnings Release
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Paris, 7 November, 2013 – JCDecaux SA (Euronext Paris: DEC), the number one outdoor advertising company worldwide published today its business review for the third quarter 2013.
Abu Dhabi. In July, JCDecaux SA announced that its subsidiary JCDecaux Out Of Home FZ-LLC, has been awarded an exclusive 10-year contract with Abu Dhabi Airports Company (ADAC). The contract has run from August 1 and grants JCDecaux the exclusive rights to operate advertising within 3 airports in Abu Dhabi: Abu Dhabi International Airport, Al Bateen Executive Airport, the only business aviation airport in the Middle East and North Africa (MENA), and Al Ain International Airport.
Dubai. In July, JCDecaux SA announced that its subsidiary JCDecaux Dicon, has extended its partnership with Dubai Airports following the award of a contract for the exclusive advertising concession at Concourse D, the brand new world-class airport facility that is set to open at Dubai International.
Doha. In July, q.media Decaux (a joint venture between q.media and JCDecaux) announced that it has been awarded an 11-year contract with one of the largest shopping malls in Doha (Qatar), City Center Mall.
Russia. In July, JCDecaux SA announced that it has implemented the first infrastructure project in Russia following its recent investment in Russ Outdoor. The Veli'k bicycle sharing system was launched on July 1, 2013, in Kazan, Russia, and will include 12 self-service bicycle docking stations and 260 bikes across the city.
United States. In September, JCDecaux SA announced that it has agreed with CBS Outdoor Americas Inc. to expand its 50/50 joint venture ("JV") to include bus-shelters in 14 cities such as the City of Burbank, the City of Pasadena, the City of Long Beach, upon the receipt of necessary consents. The JV has operated the street furniture contract with the City of Los Angeles since 2002.
In September, JCDecaux SA announced that Jeremy Male, CEO for the United Kingdom, Northern Europe and Australia, and member of the Executive Board, had resigned from his position in order to pursue other professional opportunities outside Europe.
Jean-François Decaux has taken over CEO position for the UK and regional management for Northern Europe and Australia.
JCDecaux SA announced today its revenues for the nine months ended 30 September, 2013.
On a reported basis, revenues for the third quarter declined by 0.7% to €631.6 million compared to €636.0 million in Q3 2012. Excluding the significant negative impact from foreign exchange variations (notably emerging market currencies) and the positive impact from changes in perimeter, revenues were flat. The sound recovery in Street Furniture, driven by some modest underlying improvement in most of our European markets, was offset by declines in Billboard and in Transport, which suffered from a tough comparative base mainly due to the Olympic Games (c. €20 million impact on Group revenues in Q3 2012). Core advertising revenues, excluding revenues related to the sale, rental and maintenance, decreased by 0.6% organically in the third quarter of 2013.
| Q3 revenues | 2013 (€m) | 2012 (€m) | Reported growth |
Organic growth(a) |
|---|---|---|---|---|
| Street Furniture | 267.8 | 260.3 | +2.9% | +6.0% |
| Transport | 254.2 | 268.4 | -5.3% | -2.4% |
| Billboard | 109.6 | 107.3 | +2.1% | -8.6% |
| Total | 631.6 | 636.0 | -0.7% | 0.0% |
a. Excluding acquisitions/divestitures and the impact of foreign exchange
| 9-month revenues | 2013 (€m) | 2012 (€m) | Reported growth |
Organic growth(a) |
|---|---|---|---|---|
| Street Furniture | 834.2 | 832.5 | +0.2% | +1.5% |
| Transport | 719.1 | 720.6 | -0.2% | +0.9% |
| Billboard | 341.8 | 323.1 | +5.8% | -6.2% |
| Total | 1,895.1 | 1,876.2 | +1.0% | -0.1% |
a. Excluding acquisitions/divestitures and the impact of foreign exchange
Third quarter revenues increased by 2.9% to €267.8 million (+6.0% on an organic basis), reflecting sequential improvement in most of our geographies. France was slightly down due to the continuing soft macro-economic environment. However, the UK showed strong growth and the Rest of Europe delivered good growth after being down for 7 consecutive quarters. In our main Street Furniture markets outside of Europe, Asia-Pacific was up, North America was down and the Rest of the World delivered strong growth.
Third quarter core organic advertising revenues, excluding revenues related to the sale, rental and maintenance, were up 4.9% compared to the third quarter of 2012.
Transport revenues declined by 5.3% to €254.2 million (-2.4% on an organic basis) during the third quarter. France continued to show strong growth, reflecting the success of our new digital program with Aéroports de Paris. Whilst the very tough comparative base from the Olympics last year negatively impacted UK revenues, the underlying market was healthy. Revenues in the Rest of Europe were still impacted by the loss of some contracts but showed sequential improvement relative to the second quarter. Despite the slowdown in Mainland China, Asia-Pacific revenues were up in Q3. North America was down and the Rest of the World continued to show strong growth.
Revenues during the third quarter increased by 2.1% to €109.6 million (-8.6% on an organic basis). The difference between reported and organic growth is largely due to the impact of the acquisition of 25% of Russ Outdoor. With the UK being impacted by a tough comparative relating to the Olympics and France continuing to be challenging, this segment remained very difficult in Q3. Rest of Europe, however, posted its first revenue increase since Q3 2010.
Commenting on the third quarter revenues, Jean-François Decaux, Chairman of the Executive Board and Co-Chief Executive Officer of JCDecaux, said:
"Our Q3 revenues were better than expected with stable organic revenues despite the impact of the London Olympics which significantly boosted our Q3 performance last year. We are pleased to see our biggest region "Rest of Europe" returning back to positive organic growth. This mainly benefitted our Street Furniture business and offset the impact of the slowdown in Mainland China on our Transport business. France remains resilient and the UK is quite strong reflecting a rebound in the economy. Whilst our US business has been slowing down, our Rest of the World region continue to deliver strong double-digit growth rate.
As far as Q4 is concerned, bearing in mind that visibility remains low, we expect organic revenue growth to be up low single digits, leaving the full year slightly up.
We were particularly pleased to announce today the signature of a contract for the acquisition of an 85% stake in Eumex, a market leader in Street Furniture in Latin America, a region where the outdoor advertising market is growing fast and in which we will become number one. With the recent Sao Paolo contract win, JCDecaux will now operate 36,000 advertising panels in 65 cities including 6 out of the top 10 top cities in Latin America in terms of GDP per capita. The strength of our balance sheet is a key competitive advantage that will allow us to pursue further external growth opportunities as they arise.
Looking forward, we remain convinced that out-of-home retains its strength and attractiveness in an increasingly fragmented media landscape. With our accelerating exposure to fast growing markets, our growing digital portfolio, our ability to win profitable new contracts and the high quality of our teams across the world, we believe we are well positioned to outperform the advertising market and increase our leadership position in the outdoor advertising industry."
No material event, other than the revenues evolution, has been impacting the Group operating margin, free cash or net debt during the third quarter of 2013.
The Group expects the organic revenue increase for the year 2013 to be slightly up.
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