APG benefited from the 2008 European Football Championships
The outdoor advertising company Affichage had a good year overall in 2008, both in Switzerland and in Southeast Europe. For 2009, however, the group expects a decline in revenue. It is paying particular attention to its war chest, which it intends to keep as full as possible in preparation for expected acquisitions.
So it turns out—at least one media company did benefit from Euro 08. It is APG, the Swiss parent company of the outdoor advertising group Affichage. «The European Soccer Championship in Switzerland was a positive experience for us,» said Affichage CEO Christian Kauter yesterday at the annual results press conference. Although he did not want to quantify the benefits of Euro 08, he pointed out that APG was «the only media company» to use the sporting event to offer customers customized out-of-home packages consisting of billboards, eBoards, big posters, and transit advertising.
«Our success in the market clearly demonstrated that we are on the right track with our philosophy of integrated out-of-home communication,» said Kauter. In fact, APG was able to increase its sales revenue in its home market of Switzerland by 2.9 percent to 305.9 million Swiss francs. In the previous year, revenue growth had been just 1.3 percent.
Growth in Southeastern Europe
The Group’s total revenue grew by as much as 17 percent to 452 million Swiss francs. International markets—specifically those in Southeast Europe—already account for 32.3 percent of this figure. In the previous year, that figure was just over 24 percent. However, this strong growth is largely attributable to acquisitions in Greece and Romania—and to the dissolution of Europlakat International (EPI), a former joint venture with the French outdoor advertising company JCDecaux. This dissolution enabled Affichage to fully consolidate its holdings in Bosnia and Herzegovina, Serbia, Bulgaria, Montenegro, and Hungary over the course of last year.
However, the company’s net income declined in 2008. It fell by just over 54 percent to 29.7 million Swiss francs. Much of this decline can be attributed to an extraordinary capital gain in 2007, which naturally did not recur in 2008. In addition, exchange rate losses occurred primarily in Hungary and Serbia, as these countries experienced inflation of over 20 percent last year.
APG cut the salaries of its senior management
Because Kauter expects lower sales for the current year, the company is proceeding cautiously. It has imposed a hiring freeze, implemented strict cost management, and now approves investments only on a quarterly basis. At the same time, salaries for senior management have been cut by 50 percent, as have dividend payments. The latter measure, however, is intended «to strengthen equity and liquidity as a precautionary measure,» according to the company.
To put it plainly: Affichage is striving to keep its war chest as full as possible. This is indeed necessary, as it took a hit last year. As a result, the company now has debts totaling 36.8 million. Above all, however, its equity decreased by 90 million to 220 million Swiss francs—primarily for accounting and actuarial reasons.
Acquisition Plans Despite the Crisis
But Kauter considers the debt to be low. And with an equity ratio of 38.9 percent, the group is still in good shape, he says. But taken together—debt and lower equity—these two factors do show that Affichage’s war chest is less well-stocked than it was a year ago.
Kauter expects that further opportunities for acquisitions may arise as early as this year. He is focusing his attention on three outdoor advertising companies operating in Eastern Europe: Ströer, Germany’s number one, which is heavily indebted; the Austrian company Epamedia, which recently had to be taken over by Raiffeisenbank; and the major American conglomerate Clear Channel Outdoor, the world’s number one. According to Kauter, CCO is likely on the verge of being broken up. Conclusion: To remain capable of acting, Affichage must therefore indeed keep a close eye on its war chest.
Markus Knöpfli
«Our success in the market clearly demonstrated that we are on the right track with our philosophy of integrated out-of-home communication,» said Kauter. In fact, APG was able to increase its sales revenue in its home market of Switzerland by 2.9 percent to 305.9 million Swiss francs. In the previous year, revenue growth had been just 1.3 percent.
Growth in Southeastern Europe
The Group’s total revenue grew by as much as 17 percent to 452 million Swiss francs. International markets—specifically those in Southeast Europe—already account for 32.3 percent of this figure. In the previous year, that figure was just over 24 percent. However, this strong growth is largely attributable to acquisitions in Greece and Romania—and to the dissolution of Europlakat International (EPI), a former joint venture with the French outdoor advertising company JCDecaux. This dissolution enabled Affichage to fully consolidate its holdings in Bosnia and Herzegovina, Serbia, Bulgaria, Montenegro, and Hungary over the course of last year.
However, the company’s net income declined in 2008. It fell by just over 54 percent to 29.7 million Swiss francs. Much of this decline can be attributed to an extraordinary capital gain in 2007, which naturally did not recur in 2008. In addition, exchange rate losses occurred primarily in Hungary and Serbia, as these countries experienced inflation of over 20 percent last year.
APG cut the salaries of its senior management
Because Kauter expects lower sales for the current year, the company is proceeding cautiously. It has imposed a hiring freeze, implemented strict cost management, and now approves investments only on a quarterly basis. At the same time, salaries for senior management have been cut by 50 percent, as have dividend payments. The latter measure, however, is intended «to strengthen equity and liquidity as a precautionary measure,» according to the company.
To put it plainly: Affichage is striving to keep its war chest as full as possible. This is indeed necessary, as it took a hit last year. As a result, the company now has debts totaling 36.8 million. Above all, however, its equity decreased by 90 million to 220 million Swiss francs—primarily for accounting and actuarial reasons.
Acquisition Plans Despite the Crisis
But Kauter considers the debt to be low. And with an equity ratio of 38.9 percent, the group is still in good shape, he says. But taken together—debt and lower equity—these two factors do show that Affichage’s war chest is less well-stocked than it was a year ago.
Kauter expects that further opportunities for acquisitions may arise as early as this year. He is focusing his attention on three outdoor advertising companies operating in Eastern Europe: Ströer, Germany’s number one, which is heavily indebted; the Austrian company Epamedia, which recently had to be taken over by Raiffeisenbank; and the major American conglomerate Clear Channel Outdoor, the world’s number one. According to Kauter, CCO is likely on the verge of being broken up. Conclusion: To remain capable of acting, Affichage must therefore indeed keep a close eye on its war chest.
Markus Knöpfli
