PARIS (Reuters) - Jean-Francois Decaux, chief executive of JCDecaux (JCDX.PA), said the group’s guidance for underlying sales growth of 6-7 percent in 2008 was “realistic”.
Decaux also told the Reuters Technology, Media and Telecoms Summit in Paris on Tuesday that Europe’s biggest outdoor advertising group was able to raise roughly 1 billion euros ($1.56 billion) for a big acquisition and that this could be done without diluting the shares.
JCDecaux, which is the world’s second-largest outdoor advertising group after Clear Channel Outdoor (CCU.N), plans to expand in emerging markets in coming years mostly through organic growth but could also make acquisitions there, he said.
Outdoor advertising, benefiting from more and more people traveling and spending time out of their homes, should continue to outperform the global ad market, and JCDecaux should do better than its peers, he added.
The CEO forecast outdoor advertising should grow to around 8 percent of global advertising spend in the next five to 10 years from a level below 6 percent now.
Earlier this month, JCDecaux raised its 2008 underlying sales growth goal from 6 percent.
This was on the back of very strong growth in emerging countries, especially China, and expectations of improved conditions in Britain and France from the second quarter.
“We’ve always met the guidance since we went public in 2001. Right now 6 to 7 percent is not conservative, not aggressive. It’s realistic,” he said.
Decaux said that despite the intense focus on the human rights situation in China, which is the group’s third-largest market by revenue, the region was expected to deliver “strong growth” this year.
“The growth rate in China is phenomenal”, he said, citing 36 percent growth since the beginning of the year.
The group, whose top clients include luxury giant Louis Vuiton (LVMH.PA) and Samsung Electronics (005930.KS), benefited from increased advertising spending in China ahead of this summer’s Olympic Games.
“We raised our advertising rates by 30 percent during the pre-Olympic period,” he said.
JCDecaux has made expansion in emerging markets one of its priorities. Emerging markets now represent 16 percent of total revenues and the group wants to reach 20 percent by 2010.
This would be done mostly through organic growth and any acquisitions in emerging countries could allow the group to exceed this goal, he said.
“We would like to get more and more exposed to the developing markets,” Decaux said, citing Qatar and Kazakhstan.
“There are some companies operating in those countries that could be takeover targets.”
Commenting on criteria, Decaux said acquisitions should be accretive within 12-18 months, take into account any synergies and enable JCDecaux to keep an investment grade debt rating.
Decaux would not comment on the group’s plans towards U.S. rival Clear Channel Outdoor other than to say: “Obviously we are monitoring the situation like everyone else.”
Clear Channel Outdoor is the majority-owned unit of Clear Channel Communications Inc. (CCU.N).
JCDecaux has said in the past it was interested in the unit if it was put up for sale after private equity buyers finalize the acquisition of Clear Channel Communications.