JCDecaux, the world's second biggest outdoor advertising group, warned 2009 underlying sales could decline for the first time in its history due to the global economic slump and scrapped its dividend.
Shares in the family-controlled firm dropped over 15 per cent to a new six-year low of €7.9520 as the group also posted a slight decline in 2008 earnings.
Europe's largest outdoor advertiser predicted that for the first quarter alone, sales would decline by around 10 per cent, but would not commit to a detailed forecast for the full year.
The group, whose top clients include luxury giant Louis Vuitton and Samsung Electronics, also vowed to focus on generating and preserving its cash, cutting costs and being more selective on capital expenditure.
"It is prudent in current conditions to preserve cash and ensure the group is well positioned to take advantage of opportunities that may arise in its markets," it said.
Analysts polled by Reuters Estimates had expected the group to keep the 2008 dividend at 2007's level of 0.44 cents a share.
"Given the reduced visibility we are not in a position to give guidance for the full year (2009), although comparables to 2008 may improve given the weaker second-half last year," chairman and co-CEO Jean-Charles Decaux said in the statement.
JCDecaux, which competes for budgets with world leader Clear Channel Outdoor, reported a 1 per cent drop in 2008 earnings before interest, tax, depreciation and amortisation (EBITDA) to €549.9 million euros. EBITDA as a percentage of revenue eased to 25.4 per cent from 26.4 per cent in 2007, reflecting lower margins in the group's urban furniture and billboard divisions.
The group had already warned it expected 2008 EBITDA to be "marginally lower" than in 2007.
Net profit dropped 51.1 per cent to €108.1 million. Excluding exceptional items, net profit fell 16.7 per cent to €184.2 million. Due to the poor advertising climate, the group took an impairment charge on some assets. This included a depreciation of tangible and intangible assets of €43.8 million euros and a €27.1 million goodwill charge on billboard assets.
Closely-watched capital expenditures reached €304.3 million in 2008, reflecting ongoing renewal capex and the final €39.1 million pre-payment made under the Shanghai Metro contract.
The group already reported a 6.3 per cent rise in 2008 underlying sales, lifted by a strong performance from the transport division.
The company said it had no debt repayment dates until mid-2012, and had available credit lines of €673 million.
JCDecaux trades at 12.5 times estimated 2009 earnings against 9.6 times for Publicis and 7.5 times for Havas. Its shares closed at €9.84 euros yesterday, giving the company a market capitalisation of around €2.17 billion.
Reuters