JCDecaux likely to consider dividend

PARIS Thu Dec 2, 2010 8:27am EST

PARIS (Reuters) -Outdoor ad specialist JCDecaux (JCDX.PA) will outperform the advertising market next year and is "likely to consider" paying a dividend for the first time in three years given its strong cash generation, its co-chief executive said.

JCDecaux, which competes with Clear Channel Outdoor (CCO.N), specializes in billboards and signs contracts with cities and transport authorities to put ads on bus stops, in metro stations, airports and other public spaces.

When asked whether the company could pay a dividend for 2010, Jean-Charles Decaux told the Reuters Global Media Summit: "This is something that hasn't been decided yet. We continue to believe that this is a growth company, but we are likely to consider to revisit these questions because of the strong generation of cash flow."

JCDecaux shares rose 3.3 percent to 20.59 euros by 1311 GMT, one of the top gainers in the European media index .SXMP, which rose 0.3 percent.

Outdoor ads are a niche of the advertising market that has held up relatively well in the economic downturn and is also growing at a time when the Internet is sapping advertising dollars from print and TV.

"The trend is positive for next year, without any doubt, with some clouds basically in some markets in Europe because of the sovereign debt crisis, that's for sure," Decaux told the summit in Paris on Thursday.

"But when you see our portfolio today ... we're positioned to clearly outperform the market."

Market research firm Magna Global predicts 7 percent annual growth for outdoor ads globally from 2010 to 2015.

Decaux said margins would improve in all three divisions -- street furniture such as bus shelters, transport and billboards -- in the coming years, but declined to say by how much.

JC Decaux, which is 70 percent owned by the family that founded the firm in the 1960s, paid a dividend in 2005, 2006, and 2007 but stopped in 2008 and 2009.

Decaux said the company's growth strategy would continue to be primarily organic, but it would consider acquisitions to grow in places like Russia, the United States, and in emerging markets.

The company wants to boost its revenues from emerging markets to 25 to 30 percent of total sales by 2015, from 22 percent at the end of this year, with the priority being in India, China and the Middle East.

He also cited Russia as being at a "critical" phase in the coming 18 months because the new mayor of Moscow may allow more outdoor advertising and because consolidation may occur among the players.

JC Decaux could be interested in acquisitions there, he said, although talks with News Corp (NWSA.O) over buying its Russian outdoor ad business, which fell apart in late 2008 because of the financial crisis, had not been revived.

"We have the time to build a strong and a sustainable position in Russia ... the opportunities will come," he said.

Jean-Charles Decaux added that the only transformative deal the company would consider would be in the United States, where it was currently in fourth place behind Clear Channel and CBS Outdoor, part of the CBS media group (CBS.N).

"We are clearly monitoring the situation and if some opportunities come to the market we will look at them seriously," he said. "But there are absolutely no talks today in the U.S. market."

Such a major deal could be financed through debt, cash, or even by reducing the family's ownership while maintaining its control, he said.

"There are no taboos," he said when asked about the possibility of lowering the family stake.

JC Decaux shares have climbed about 17 percent this year, rising more than the Stoxx Europe Media index .SXMP which is up 10 percent, but less than advertising agencies like Publicis and WPP, which are up 23 and 20 percent respectively.

(Additional reporting by Georgina Prodhan and Cyril Altmeyer; Editing by Hans Peters)