Advertising: JCDecaux returns to the green but falls heavily on the stock market

Green profitability, a stock price in the red. On Thursday, the French group JCDecaux announced that it had generated a net result of 132 million euros last year, after having recorded a slight loss in 2021 (- 14.5 million) and a massive deficit in 2020 (- 604.6 million) due to the health crisis. “After a year 2021 of post-covid convalescence, we have regained momentum, argued Jean-Charles Decaux, chairman of the management board of the world number one in outdoor communication during the annual results. Last year, all segments of our business experienced double-digit growth”.

In detail, street furniture (weighing more than half of the group’s revenues), transport and billboard posted organic growth rates, respectively, over one year, of 18.5%, 15% and 13.5%. %. In all, JCDecaux’s overall turnover amounted to 3.3 billion euros, a jump of 16.6% compared to 2021, but remains below the volume of activity recorded in 2019 ( 3.9 billion).

The reason ? JCDecaux continued its take-off in all countries – including France where turnover accelerated by 12.1%, over one year, to nearly 600 million, i.e. almost the level of activity recorded pre-Covid -, except in China, which became the first market for the tricolor firm before the health crisis. Last year, China accounted for 11% of the group’s revenues compared to nearly 20% in 2019.

No dividends

Rest that the end of the “zero covid” policy should be a game-changer for the 2023 financial year… at least in a few weeks, according to the group’s forecasts, which is counting on growth of nearly 2.5% in its overall organic revenues during the first quarter. A marked deceleration in its growth due to a double-digit drop in sales in China over the period. “We are starting to see an inflection point in China and our business there will pick up from the second quarter. But we still do not know what the degree of this slope will be, ”imaged Jean-Charles Decaux.

An announcement that did not delight the financial markets. On the Paris market, the group’s share price fell sharply by nearly 13% this Thursday at noon, bringing its market capitalization to 4.22 billion euros. Investors were also expecting an operating margin of 429 million euros in the second half, but it finally settled at 419 million. And according to a note from JP Morgan, the current economic situation would be “a significant headwind to advertising budgets this year, with further downside risk to earnings.”

Another explanation for this pronounced stock market decline: JCDecaux announced that it would, again this year, refrain from paying any dividends to its shareholders. “It never really stopped, but consolidation could restart this year in the sector and we must have funds to finance these possible external growth operations”, justified Jean-François Decaux, co-CEO of the group who could therefore to be most active on this front in 2023.