JCDXY - JCDecaux SE (JCDXF) Q4 2023 Earnings Call Transcript

2024-03-07 16:57:08 ET

JCDecaux SE (JCDXF)

Q4 2023 Results Conference Call

March 07, 2024 7:30 AM ET

Company Participants

Jean-François Decaux - Chairman of the Executive Board and Co-CEO

Jean-Charles Decaux - Co-CEO

David Bourg - Chief Financial Officer

Remi Grisard - Head of Investor Relations

Conference Call Participants

Lisa Yang - Goldman Sachs

Conor O'Shea - Kepler Cheuvreux

Annick Maas - Societe Generale

Benjamin Yokyong-Zoega - Deutsche Bank

Presentation

Jean-François Decaux

Good afternoon, everyone. Good morning to those of you in the U.S., and welcome to our 2023 full year results conference call, which is also being webcast. The speakers on this call will be Jean-Charles Decaux, Co-CEO; David Bourg, Chief Financial Officer, IT and Administrative; and myself. Remi Grisard, Head of Investor Relations, is also attending today's conference call. On Slide 4, 2023 has been a positive year for JCDecaux with a solid business momentum leading to an improved financial performance. Our revenue increased by 8.7% organically, driven by the strong growth of digital revenue above 20%.

Digital revenues now represent more than 1/3 of our business at a record 35.3% for 2023. Programmatic revenues have been especially dynamic this year, growing more than 60% year-on-year with more than €100 million of advertising revenue in 2023.We remain best-in-class in ESG, as shown by our recent A List inclusion by CDP Climate. We have proved that we are able to have a positive operational leverage by growing our operating margin more than our revenue at plus 10% year-on-year despite a decrease in China given the soft revenue recovery. Our net results improved significantly by plus 58.3%. Operating cash flows grew in line with our activity at plus 19.8% year-on-year.

While our free cash flow was close to breakeven this year, it is very clearly positive when you exclude one-offs of close to €100 million linked to contract renegotiations with positive long-term benefits that we have detailed during our H1 results. So at the end of the day, as you see a healthy business model leveraging on the recovery with a good momentum for out-of-home media with advertisers, but still affected by some one-offs and by the exceptional situation in China. So still room for growth in the coming years. On the next slide, #5, organic moving -- you will see that our Q4 organic growth has beaten by far our expectations at plus 10.3% compared to a guidance at around plus 6% as we finished well the quarter, including with some positive impact of late money from digital. China improved throughout the year and even grew above the Group average in Q4 despite non-renewal of our airport and metro contracts in Guangzhou. We continued to progressively bridge the gap between 2019 with Q4 being the first quarter above 2019 and our largest quarterly revenue ever. On Slide 6, you will see that our growth has been driven by the recovery of our transport activity and by the continued positive momentum of our street furniture activity, which is now well above 2019.

Transport grew by plus 18.4% organically on the back of the recovery in mobility, including for air traffic. But it should be noted that transport remains far from the 2019 level at minus 24.7%, mainly due to China, which leaves us room for growth. Street furniture grew by 5.1% year-on-year and was 8.9% above 2019 levels in 2023 with a good momentum linked to the digitization and the solid demand from advertisers for this media. Billboard, a smaller business for our company, as you know, increased by 0.7% year-on-year, growing at healthy rates in its most digitized markets, while it suffered from the rationalization of sites and from regulations in France. On the next Slide, 7, you can see that all regions grew positively and 3 out of 6 grew double-digit. U.K. and North America have been strong from Q2 and continue to see a good momentum. France has had a strong Q3 and good Q4. Rest of Europe saw good performance in Southern Europe. And Asia Pacific has been growing double-digit, but remains well below 2019.Looking at the revenue breakdown on Slide 8. Street furniture represents more than 50% of revenue, while transport at 34.5% is still below its usual 40% level.

France is our top country at 17.8%. And the Rest of Europe, our top geography together with their represent 47.4% of total revenue. On the next slide, #9, you can see that the advertising revenue is tracking and even outpacing air traffic in the U.S. as well as in the Middle East. Our revenue now is well above 2019, exceeds the current traffic level, which is quite promising for the other regions. On Slide #10, you will find our revenue by client categories. Our client portfolio diversification remained very strong with our top 10 clients representing less than 14% of our revenue....

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