JCDecaux reports Full Year 2009 results

JCDecaux reports Full Year 2009 Results

• Revenues down 11.5% to €1,918.8 million, organic revenues down 10.9%
• Operating margin decreases by 28.7% to €392.0 million
• EBIT decreases by 48.1% to €122.8 million
• Net income Group share decreases by 77.3% to €24.5 million
• Free cash flow, up 11.1% to €164.8 million
• No dividend proposed for the year
• Expected organic revenue growth around 5% in Q1

Paris, 10 March 2010 - JCDecaux SA (Euronext Paris: DEC), the number one outdoor advertising company in Europe and Asia-Pacific and the number two worldwide, announced today results for the year ended December 31, 2009. The accounts are audited and certified.

Revenues

As reported on 28 January 2010, consolidated revenues decreased by 11.5% to €1,918.8 million in 2009. Excluding acquisitions and the impact of foreign exchange, the organic revenue decline was 10.9%.

Operating Margin (1)

Group operating margin decreased by 28.7% to €392.0 million from €549.9 million in 2008. The operating margin as a percentage of consolidated revenues was 20.4%, down 500 basis points compared to the prior period (2008: 25.4%), reflecting strong operating leverage partly offset by the cost saving measures successfully implemented in 2009.

• Street Furniture: Operating margin decreased by 24.8% to €298.4 million. As a percentage of revenues, the operating margin decreased to 31.9% compared to 37.3% in 2008. Operating margin as a percentage of revenues for the second half of the year was higher than for the first half of 2009 benefitting from the stronger advertising revenues in Q4 as well as the full impact of the measures implemented by the Group during 2009.

• Transport: Operating margin decreased by 32.6% to €55.6 million. As a percentage of revenues, the operating margin was 9.4% (2008 :13.1%). The deterioration of the transport operating margin was driven by the decline in revenues in most regions of the world. The new airports operated in the Rest of the World region contributed positively to the Group operating margin in 2009.

• Billboard: Operating margin decreased by 46.1% to €38.0 million and as a percentage of revenues the operating margin was down to 9.6%, compared to 14.8% in 2008. This was mainly due to the revenue decline over the period in all the countries where the Group operates. Revenue declines were only partly offset by the satisfactory implementation of the cost saving program, targeting most specifically the renegotiation of leases and inventory reduction in some markets.

EBIT (2)

• EBIT decreased by 48.1% to €122.8 million, down from €236.4 million in 2008. The Group’s EBIT margin was 6.4% of consolidated revenues. Due to the current advertising environment and the negative outlook in some markets, certain of the Group’s assets were impaired over the period. Exceptional depreciation of tangible and intangible assets amounted to - €20.6 million in 2009. Excluding the impact of impairment of
• - €20.6 million, EBIT was €143.4 million. Depreciation remained relatively flat in 2009 while the consumption of maintenance spare parts slightly decreased.

Net financial income improved by €34.3 million to - €16.2 million in 2009, compared to - €50.5 million in 2008. This mainly reflects a significant decrease in the interest rates as well as the non recurring €10.7 million financial gain on a Joint Venture debt forgiveness.

Equity affiliates

• Share of net profit from equity affiliates decreased by €12.0 million to - €30.7 million, compared to
• - €18.7 million in 2008. The decrease in the share of net profit from equity affiliates reflects the disappointing underperformance of most affiliates in 2009 as well as the impact of a Group impairment charge on the value of its investments of €14.8 million and significant exceptional charges recorded by Affichage Holding. Excluding the impact of impairment charges and exceptional items in 2008 and 2009, share of net profit from equity affiliates was - €0.9 million in 2009, down €10.2 million compared to 2008.

Net income Group share

Net income Group share decreased by 77.3% to €24.5 million, compared to €108.1 million in 2008. Excluding the impact of impairment charges and exceptional debt forgiveness on EBIT, net financial income, taxes, equity affiliates and minority interests, net income Group share was €58.9 million, down 68.0% compared to the restated 2008 net income. This decrease reflects the lower operating margin, the increase in the effective tax rate and the strong decline in the performance of equity affiliates only somewhat offset by the improved net financial income.

Capital expenditure

Net capex (acquisition of tangible and intangible assets, net of disposals of assets) was €179.7 million, compared to €304.3 million in 2008. This decrease reflects the increased contract selectivity of the Group as well as fewer projects throughout the year. In 2009 the Group also received €14.1 million cash proceeds for the sale and lease back of one of its buildings in the UK.

Free Cash flow (4)

Free cash flow increased to €164.8 million in 2009 from €148.0 million in 2008 as a consequence of the strong reduction of capital expenditure and the further optimization of the Group’s working capital requirements more than offsetting the significant reduction of the operating margin.

Net debt (5)

Net debt as of 31 December 2009 decreased by €36.6 million to €670.0 million compared to €706.6 million as of 31 December 2008. The Group decreased its net debt by the end of 2009 despite the strong reduction in operating margin and the impact of the acquisition of an additional 49.2% holding in Wall AG.

Net debt as of 31 December 2009 represented 1.7 time 2009 operating margin. Available committed credit lines amount to €775.0 million.

Dividend

At the next Annual General Meeting of Shareholders (to be held on May 19th, 2010), the Executive Board will not recommend the payment of a dividend for the 2009 financial year, reflecting the Board’s view that it is prudent in current conditions to ensure that the Group is well positioned to take advantage of opportunities that may arise in its markets.

Commenting on the 2009 results, Jean-François Decaux, Chairman of the Executive Board and Co-CEO, said:

"Faced with the worst advertising downturn on record, JCDecaux implemented a successful cost reduction program which helped reduce the impact on our margin and coupled with a selective investment strategy also ensured that the Group delivered improved free cash flow for the year. The performance of our teams around the world and the robustness and adaptability of our business model underpinned these results and enabled us to clearly outperform most of our direct competitors.

The more positive advertiser sentiment we reported in January 2010 has continued during the first quarter of this year and we currently anticipate that JCDecaux can achieve positive organic revenue growth of around 5% in Q1 2010. However the market continues to be characterized by reduced visibility and it remains unclear whether this is the beginning of a sustained advertising recovery. Reflecting this and in order to maximize the Group's ability to take advantage of market opportunities, we will maintain strict cash and cost management in 2010. Accordingly the Board is also proposing that no dividend will be paid for 2009.

JCDecaux has further reinforced its portfolio consolidating its European position by completing the acquisition of Wall in Germany and certain Titan assets in the UK and continued its development in emerging markets. These factors, combined with the structural growth of the outdoor advertising industry and the strength of our balance sheet, pave the way for the Group to come out of this economic crisis in a stronger position within our sector.”

(1) Operating Margin = Revenues less Direct Operating Expenses (excluding Maintenance spare parts) less SG&A expenses

(2) EBIT = Earnings Before Interests and Taxes = Operating Margin less Depreciation, amortization and provisions less Impairment of goodwill less Maintenance spare parts less Other operating income and expenses

(3) Net financial income = excluding €22.6m impact of put on Gewista’s minorities actualization in 2008 and - €3.4m of Gewista and Somupi in 2009

(4) Free cash flow = Net cash flow from operating activities less net capital investments (tangible and intangible assets)

(5) Net debt = Debt net of cash including the non-cash impact of IAS39 (on both debt and derivatives) and excluding the non-cash impact of IAS 32 (debt on commitments to purchase minority interests)

• Next information:
• Q1 2010 revenues: 5 May 2010 (after market)
• Annual General Meeting of Shareholders: 19 May 2010

Forward Looking Statement

Certain statements in this release constitute « forward-looking statements » within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The words or phrases « guidance », « expect », « anticipate », « estimates » and « forecast » and similar words or expressions are intended to identify such forward-looking statements. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements.Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this release include, but are not limited to : changes in economic conditions in the U.S. and in other countries in which JCDecaux currently does business (both general and relative to the advertising and entertainment industries) ; fluctuations in interest rates ; changes in industry conditions ; changes in operating performance ; shifts in population and other demographics ; changes in the level of competition for advertising dollars ; fluctuations in operating costs ; technological changes and innovations ; changes in labor conditions ; changes in governmental regulations and policies and actions of regulatory bodies ; fluctuations in exchange rates and currency values ; changes in tax rates ; changes in capital expenditure requirements and access to capital markets. Other key risks are described in the JCDecaux reports filed with the U.S. Securities and Exchange Commission. Except as otherwise stated in this news announcement, JCDecaux does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.