Out-of-home advertising Following the replacement of JCDecaux in Eastern Europe, Affichage reports its best result ever.
Affichage CEO Christian Kauter was visibly proud when he presented his company's balance sheet on February 26: "This is the best result in the history of Affichage Holding and APG." Sales revenue increased by 20.4 percent to 386.4 million Swiss francs, the operating result before acquisition-related amortization even exceeded sales growth, and the net result almost doubled and now amounts to 62 million Swiss francs.Affichage CFO Ulrich von Bassewitz summarized the result as "continuity in Switzerland and new beginnings abroad". In fact, Affichage succeeded last year in renewing the Winterthur and Chur city contracts and retaining the outdoor advertising at SBB stations and railroad lines. However, sales revenue in Switzerland only increased by 1.3 percent; in 2006, Affichage reported a plus of 10 percent in Switzerland.
In contrast, sales in South East Europe rose by 224.1%. According to von Bassewitz, however, these figures give an inaccurate picture, as various sales losses were foreseeable or even calculated in the domestic market: Firstly, it was clear that the advertising bans would cause further revenue losses in tobacco advertising. Ten years ago, tobacco advertising contributed 15 percent to APG's turnover, but today it only accounts for 2 percent. Secondly, Affichage had decided to forego various marketing mandates in the sports sector (Spengler Cup, national football team) for reasons of profitability. Von Bassewitz therefore interpreted the seemingly low growth in the domestic market as a strong increase in sales revenue, as the expected loss of income could be more than compensated for.
The growth rate abroad, on the other hand, was primarily due to the acquisitions made, von Bassewitz noted. Last year, Affichage acquired companies primarily in Greece and Romania (see also
p. 1) and also dissolved the ten-year joint venture Europlakat International (EPI) with JCDecaux in the middle of the year. As a result, the outdoor advertiser was able to fully consolidate its activities in Bulgaria, Serbia, Montenegro, Bosnia and Hungary, which Affichage had previously only partially consolidated, as of July 1, 2007. Conversely, Serbia and Slovenia, which still contributed to Affichage's sales in the first half of 2007, were fully transferred to JCDecaux from July. Purely organic growth abroad, i.e. excluding these acquisitions and disposals, nevertheless amounted to a respectable 11.8 percent. The international share of total sales thus increased from 8.6% to 23.1%. "This means we are very close to the target we set ourselves two years ago," said Kauter happily. Affichage had set itself the target of increasing the proportion of sales generated abroad to 25 percent by the end of 2008 - in order to reduce its heavy dependence on the increasingly regulated domestic market.
There is still one reservation to be made here: Although the unbundling of EPI has been completed financially, it still requires the legal approval of the competition authorities in the individual countries. Affichage hopes that this will be the case by the end of 2008.
Madeleine Linter, Head of the new Affichage International division since last October, emphasized that the primary task now is to integrate the activities in the countries of South-Eastern Europe. "We have eight markets there, now we have to master them," she said. Affichage wants to achieve this not only by gaining market share, but also through quality in the product range and transparency in dealing with customers.
Markus Knöpfli
Pike in the carp pondOut-of-home advertiser Affichage already earns almost one in four francs in south-eastern Europe. Over the past two years, the out-of-home advertiser has been buying companies by the meter. In Romania, for example, it made a small investment. But it didn't stop there. Madeleine Linter, the new Head of Affichage International, explains the approach.
Affichage entered eastern Romania in January 2006 with the purchase of the small company Churchill View - 30 employees, a turnover of 4.5 million euros and a market share (MA) of 15 percent. Seven months later, Affichage acquired the company RBN and increased its market share to 17 percent. In September 2007, the company Amco was added, increasing Affichage's MA to 19 percent, expanding westwards and rising to number 2.
Affichage will soon announce the acquisition of the Multireklam Group, which will enable it to cover the entire country - with a 33 percent MA, a turnover of 13.4 million euros and 60 employees. "We will then be so strong that we can chase the number one in the market," said Linter proudly. (mk)