The East is already black
Outdoor Advertising With the acquisition of Alma Quattro in Serbia and Montenegro, Europlakat became the market leader in nearly all of the successor states of the former Federal Republic of Yugoslavia. And it hopes to become the number one company in Hungary as well in the near future.
Outdoor advertising With the takeover of Alma Quattro in Serbia and Montenegro, Europlakat has become the market leader in almost all the successor states of the former Federal Republic of Yugoslavia. Market leadership in Central European countries through internal growth and acquisitions" is the strategic goal of Europlakat (EPI), the joint venture between the Swiss poster company Affichage and the French outdoor advertising company JCDecaux. The purchase of Alma Quattro (see WW 17/03) in Serbia and Montenegro brings EPI a big step closer to achieving this goal. The takeover has also consolidated the market in Serbia and Montenegro to a Western European level: From now on, there are three instead of four well-known providers operating there - and EPI is number 1. This was already the case in 2001. At that time, EPI had a market share (MA) of 40 percent in the large-area segment. Last year, however, the company fell back to second place with just over 20 percent, while its MA for city light posters (CLP) was only around five percent. EPI now has over 60 percent for both formats.
This means that EPI is now at the top of the podium in three former Yugoslav republics: The joint subsidiary of Affichage and JCDecaux also achieved similarly high MAs in Croatia and Bosnia-Herzegovina. However, as previously in Serbia and Montenegro, the MA in Croatia and Bosnia, as well as those in Slovenia and Hungary, are trending downwards.
Segmented marketsFor two reasons: Firstly, the markets continue to segment themselves. Last year, for example, the number of billposters in Croatia rose from seven to eight, in Hungary from 15 to 18 and even in economically underdeveloped Bulgaria from 12 to 14. Only in Bosnia did the number of providers fall from eight to four, and in Slovenia it remained constant at nine billposters.
In addition, all of these providers are setting up their own poster sites, which is constantly changing the MA. Affichage CEO Christian Kauter describes Hungary and Bulgaria in particular as "atomized markets" in which he expects a trend reversal within the next two years. EPI is also hoping for a nibble of consolidation here and there - and a corresponding increase in MA. It is quite possible that something will change in the CLP segment in Hungary as early as this year. In any case, talks are being held with potential takeover candidates, said Affichage CFO Ulrich von Bassewitz. Hungary is the EPI country that achieved the highest growth in sales in 2002 with an increase of 42 percent (totaling 16.8 million Swiss francs).
Croatia is also doing well, with EPI achieving sales of CHF 12.4 million (+30%). In Slovenia, however, the MA could be larger than it currently is. This is because EPI was awarded the concession for the capital city of Ljubljana last year, but after a change of government and an appeal against the decision, it is once again in limbo. Kauter, however, is confident. After all, sales in Slovenia also rose by 12 percent to CHF 5.5 million last year. In Bosnia-Herzegovina, on the other hand, sales are still weak (CHF 4.3 million) despite a high MA, but the country is catching up, with an EPI growth rate of 21 percent. Kauter expects EPI sales growth of 15 to 20 percent in Eastern Europe this year. The forthcoming eastward expansion of the EU makes countries such as Hungary, Croatia and Slovenia in particular markets with great potential for out-of-home advertising.
Breaking promises in WarsawEPI has also cut back in Eastern Europe in recent months: The company withdrew from Poland, the Czech Republic and Slovakia and contributed to the consolidation of the markets there (see box). From Poland because of "suboptimal management" (Kauter), because of a ban on tobacco advertising and because the concession for Warsaw is not being adhered to by the city authorities.
The German out-of-home advertiser Ströer benefited from EPI's withdrawal. The situation was different in Slovakia and the Czech Republic, where it would have been possible to integrate existing JCDecaux subsidiaries into EPI (JCDecaux has a 25-year concession for Prague, among others), but this exceeded the financial possibilities of Affichage, which only wants to finance its acquisitions with its own funds. EPI therefore withdrew from the two countries and sold its previous shares to JCDecaux, which remains active there independently of EPI. However, it would be possible for EPI to re-enter the market. EPI is not active in Albania and Macedonia, but has started to set up a billboard network in Kosovo.
Affichage CEO Christian Kauter expects sales growth of 15 to 20 percent for Europlakat in Eastern Europe.
This means that EPI is now at the top of the podium in three former Yugoslav republics: The joint subsidiary of Affichage and JCDecaux also achieved similarly high MAs in Croatia and Bosnia-Herzegovina. However, as previously in Serbia and Montenegro, the MA in Croatia and Bosnia, as well as those in Slovenia and Hungary, are trending downwards.
Segmented marketsFor two reasons: Firstly, the markets continue to segment themselves. Last year, for example, the number of billposters in Croatia rose from seven to eight, in Hungary from 15 to 18 and even in economically underdeveloped Bulgaria from 12 to 14. Only in Bosnia did the number of providers fall from eight to four, and in Slovenia it remained constant at nine billposters.
In addition, all of these providers are setting up their own poster sites, which is constantly changing the MA. Affichage CEO Christian Kauter describes Hungary and Bulgaria in particular as "atomized markets" in which he expects a trend reversal within the next two years. EPI is also hoping for a nibble of consolidation here and there - and a corresponding increase in MA. It is quite possible that something will change in the CLP segment in Hungary as early as this year. In any case, talks are being held with potential takeover candidates, said Affichage CFO Ulrich von Bassewitz. Hungary is the EPI country that achieved the highest growth in sales in 2002 with an increase of 42 percent (totaling 16.8 million Swiss francs).
Croatia is also doing well, with EPI achieving sales of CHF 12.4 million (+30%). In Slovenia, however, the MA could be larger than it currently is. This is because EPI was awarded the concession for the capital city of Ljubljana last year, but after a change of government and an appeal against the decision, it is once again in limbo. Kauter, however, is confident. After all, sales in Slovenia also rose by 12 percent to CHF 5.5 million last year. In Bosnia-Herzegovina, on the other hand, sales are still weak (CHF 4.3 million) despite a high MA, but the country is catching up, with an EPI growth rate of 21 percent. Kauter expects EPI sales growth of 15 to 20 percent in Eastern Europe this year. The forthcoming eastward expansion of the EU makes countries such as Hungary, Croatia and Slovenia in particular markets with great potential for out-of-home advertising.
Breaking promises in WarsawEPI has also cut back in Eastern Europe in recent months: The company withdrew from Poland, the Czech Republic and Slovakia and contributed to the consolidation of the markets there (see box). From Poland because of "suboptimal management" (Kauter), because of a ban on tobacco advertising and because the concession for Warsaw is not being adhered to by the city authorities.
The German out-of-home advertiser Ströer benefited from EPI's withdrawal. The situation was different in Slovakia and the Czech Republic, where it would have been possible to integrate existing JCDecaux subsidiaries into EPI (JCDecaux has a 25-year concession for Prague, among others), but this exceeded the financial possibilities of Affichage, which only wants to finance its acquisitions with its own funds. EPI therefore withdrew from the two countries and sold its previous shares to JCDecaux, which remains active there independently of EPI. However, it would be possible for EPI to re-enter the market. EPI is not active in Albania and Macedonia, but has started to set up a billboard network in Kosovo.
Affichage CEO Christian Kauter expects sales growth of 15 to 20 percent for Europlakat in Eastern Europe.
Market position of Europlakat in Eastern EuropeHungary
GF < 20% (No. 2) CLP < 10% (No. 4)
Slovenia
GF < 40% (No. 2) CLP < 20% (No. 2
Croatia
GF > 40% (No. 1) CLP > 60% (No. 1)
Bosnia-Herzegovina
GF > 60% (No. 1) CLP > 60% (No. 1)
Serbia/Montenegro
GF > 60% (No. 1) CLP > 60% (No. 1)
Bulgaria
GF > 20% (No. 2) CLP -
GF = Large format; CLP = City Light Poster Source: Affichage
Last yearEPI generated total sales of CHF 72.3 million (+8.3%). Of which
17.9 million francs (around a quarter) were generated in Poland, the Czech Republic and Slovakia, which have since been discontinued. In 2002, EPI generated a small
Profit realized.
The exit from the Czech Republic and Slovakia in the second half of 2002 also had an impact on Affichage's total sales revenue: These fell last year by 18.7 million francs to 301.6 million francs (-5.8%), with the EPI exit from the Czech Republic and Slovakia contributing around three million francs. (mk)
Markus Knöpfli
