JCDecaux plots international expansion

03 August 2009

PARIS: JCDecaux, the world's second-largest outdoor advertising company, has indicated its interest in bucking the economic malaise and making acquisitions in both America and emerging markets.

The French group has long harboured ambitions of gaining a foothold in the US, which accounts for 40% of the world market. A purchase of either Clear Channel Outdoor or CBS Outdoor – currently the first and third largest operators respectively – would also propel JCDecaux into top spot in its category.

Following release of its first-half results, company chief executive Jean-Francois Decaux commented that whilst Clear Channel was often touted as a possible target, "CBS Outdoor is another US-based player that could be of interest for us … one feels that outdoor advertising is not a core business. What matters to them is media content."

He also indicated that JCDecaux was considering its options for growth in other markets, including Asia, Africa and the Middle East.

Although the group has trimmed its 2009 investment plans by some €25 million ($35m, £21m), it is still expecting to invest €225m in the business this year.

In addition, Jean-Francois Decaux said it had some €600m in unused credit at its disposal and that its current debt was only 1.6 times its operating margin, compared to 4 or 5 times for its competitors.

He also indicated that the JCDecaux family would be willing to reduce their 73% stake in the business to increase capital, although with the company share price trading at 55% of its 2007 peak, market conditions were not currently favourable for such a move.

Speaking about the market more broadly, Decaux added "We are not expecting a rebound of the advertising market in the second half of the year, but a stabilisation."

"We have the impression that we've hit bottom, especially in those markets that have proven most difficult like the UK and Spain."

Data sourced from Wall Street Journal; additional content by WARC staff