JCDecaux SE

Ladies and gentlemen, welcome to the GSE Decaux 2025 Full Year Results presentation. I will now hand over to Jean-François Decaux, Chairman of the Executive Board and Co-CEO. Sir, please go ahead.

Good morning, everyone, and welcome to our 2026 Full Year Results conference call. The speakers on this call will be Jean-Charles Decaux, Co-CEO, David Bourg, Chief Financial IT and Operations Officer, and myself, Remy Grisard, Head of Investor Relations, is also attending today's conference call. On the front cover, we chose this picture of one of our large digital kiosks on Market Street in San Francisco with an AI-related campaign because this new client category generated last year 30% of all revenues in the San Francisco advertising market. Moving now to slide four, overall 2025 is a solid year with robust underlying growth and strong performance in our key financial indicators. First, revenue. Our organic revenue growth is up 1.8% and 3.2% if we include the impact of the Paris 2024 Olympic Games and UEFA Europe. So despite a tougher comparable, and a more challenging as well as an uncertain macro environment, our underlying top line continues to grow. Second, digital. Our digital revenue grew by 10% organically and now represents 41.7% of total group revenue with programmatic up 17.3% and reaching 10.4% of digital revenue. This confirms that digital and especially programmatic remain a key driver of our growth and of the transformation of the group. On the profitability slide, we demonstrate the strength and operating leverage of our business model. Our operating margin rate improved to 20.9%, up 150 basis points year-on-year, recurring EBIT increased by 18.6%, and our net results, excluding the APG SGA capital gain in 2024, is up 22.8%. Finally, and very importantly, we delivered record free cash flow of €342.9 million, up 47.9%. But David will comment all of that later. Bottom line, we delivered our 2026 target one year ahead of plan. On slide number five, And focusing on Q4, we recorded an organic growth rate of 1.6% above our guidance and our expectations around FLAP. Our advertising revenue recorded a plus 3.1% organic growth reflecting an acceleration versus Q3 and a solid advertising momentum, especially compared to traditional media companies in Europe. Non-advertising revenue were affected by a high comparable base in 2024, linked to the contract of the Paris Automatic Public Toilet Network. Digital accounted for close to 45% of revenue, a 1.9 points increase, with programmatic digital out of home up 14%, and representing 11% of digital revenue. Coming back to, on slide six, coming back to our full year 2025 revenue performance, reported growth at 0.8%, was affected by a negative foreign exchange impact, partially offset by acquisitions and other changes in scope. Street furniture maintained its strong momentum with plus 1.9% organic growth, even against a base that had benefited from sporting events in Europe last year. Transport continued its rebound, growing plus 3.3% organically, despite the mid-single-digit revenue decline in China. Outside of China, growth was much stronger, reaching 6.8% organically. Billboard decreased by 2.3% organically, mainly due to high comparable and further rationalization of our inventory in France. On the next slide, number seven, you can see that North America and the rest of the world were key growth drivers as they grew high single-digit, while the rest of Europe grew low single-digit, and UK and Asia Pacific decreased low single-digit. France decreased mid-single-digit, impacted by its high comparable, excluding the 2024 Paris Olympic Games, France grew by 1.8% on an organic basis. This shows the strength of our geographically diversified model. On slide number eight, we are not only well diversified geographically, but also by activities. Split furniture now constitutes 50.7% of total revenue, while transport at 35.8% has not yet recovered its 2019 revenue share of more than 40%. Billboard remains our smallest segment, accounting for 13.4% of total revenue, as we continue to focus on premium assets and on digitization wherever possible in this segment. France is our largest country, representing 16.7% of total revenue, while Europe makes up nearly 50%. The UK ranks as our second largest country. Our exposure to China continues to decrease to around 10% in 2025 versus 18% in 2029. Turning to the slide number nine, Our client portfolio is well diversified, with our top 10 clients contributing to less than 13% of revenue. We observe a healthy rotation among leading advertising categories. Fashion, luxury, and personal care, our largest category at 18% of sales, turned slightly negative at minus 5%. Meanwhile, the next three categories showed robust growth, retail at plus 7%, entertainment film at 11% plus, and finance at 13%. Next slide, number 10, digital out of home remain a key growth driver as it grew by plus 10% organically in full year 2025. Digital revenue penetration rose by almost three percentage points year on year, reaching 41.7% in full year 2025 and almost 45% in Q4. Our digital revenue distribution continues to closely mirrors our business mix as demonstrated in the next slide. Digital penetration on slide number 11 increased across all three business segments. In split furniture, digital revenue climbed to 39.9% compared to 36.9% a year earlier. Digital revenue in transport, our most digitized segment, grew from 44.1% to 46.4%. In billboard, digital revenue reached 35.8% from 33.8% a year earlier. Let's move on to slide number 12. with programmatic advertising which soared by 19.2% in 2025, reaching €100.5 million, or 10.9% of our digital revenue, up from 9% the previous year. We consider that more than 50% of this revenue is purely incremental, coming from new advertisers and targeted campaigns. Programmatic revenues remain primarily incremental, sourced from smaller advertisers or from targeted campaigns such as this campaign, for a new perfume in Berlin. On slide 13, we anticipate continuous strong growth. For programmatic revenue, there is an important gap today between countries such as Germany at 36.5% and the Netherlands at 28.6%, surpassing the group average at 10.9%. And some major digital markets like the UK and the US, which have not yet fully embraced programmatic. We predict programmatic penetration will continue to rise in the medium term to evolve 20%. On the next slide, number 14, which is pretty full, you will find our most important contract wins and renewals in 2025. Taking a few examples in street furniture, we secured contracts in Europe with Camilla Carrefour, Rennes Freestanding Units, Odense in Denmark, Barcelona Street Furniture in Spain. In Japan, the third advertising market worldwide, we strengthened our footprint with Fukuoka, Kawasaki, Nagano, Nara, and Sapporo. In Australia, we renewed the important contract of Melbourne Yarra Trans, which was announced last week. In transport, we renewed Northern Rail in the UK, Brussels Airport, and buses, Metro in Belgium, National Rail in Norway. In North America, we want Denver Airport in the USA, the number 10 airport in the world with 82 million passengers. Finally, in billboards, we strengthened our portfolio both in Portugal and in Ireland. To address the frequent analyst question regarding contract losses, the two main examples are CityBus in Hong Kong and Danish Rail in Denmark. Finally, before handing over to David Bourg, we have confirmed our excellent ESG performance. Our performance was recognized as best in class by extra financial rating agencies, including our placement on the CDPA list for the third year in a row and the silver medal status from Ecovalis. We have received as well, again, the best score AAA from MSCI, and sustainability rated as a low-risk company among the media. More broadly, I would like to emphasize that out-of-home media is among the least carbon-intensive media formats for advertisers. I will now hand over to David for the presentation of our financial highlights of the year.

Thank you, Jean-Francois. On this first slide at page 17, you can see our key financial metrics for 2025. On this picture, the message is clear. 2025 is a very solid year, as Jean-Francois already mentioned. On revenue of 3,967,000,000, up 0.8% on a reported basis, we deliver strong operating leverage across the P&L, a record level of free cash flow, and a lower net debt. While we continue to invest, and resumed our dividends. Bottom line, with an operating margin at 831 million, 20.9% of the revenue, and a free cash flow at 342.9 million, we exceeded our 2026 target one year in advance. Let's now look in more detail at each KPI on the following slides, starting first with the evolution of our operating margin on the next slide. As you can see on the left side, our operating margin increased by 66.6 million from 764.5 million to 831.1 million, plus 8.7% year-on-year, while the revenue increased by 0.8%. And so, as you see on the right, the margin rate improved by 150 basis points from 19.4% to 20.9%. This strong performance mainly reflects lower rents and fees, in particular after the contract reset in mainland China, and a very tight control of other operating costs, which are almost flat. This means we captured almost all of the 1.7% growth in advertising revenue. You also see lower cost of goods sold linked to a 6.5% decline in non-advertising revenue, partly due to the end of the automatic toilet installation program in Paris. As you can see again on the right-hand side, margin expansion is visible across all segments. Street furniture is now above 27%, a level we hadn't reached since 2015. Billboard stands at 17.6% and transport at 13.5%, with the strongest improvement of 230 bps mainly driven by China, and a strong growth in the rest of the world. On slide 19, you have the EBIT bridge from operating margin of $831.1 million. On the top of the table, we deduct net amortization and depreciation, which are slightly up, and maintenance per part almost up moderately. This brings us to recurring EBIT in the middle of the table at 376.7 million, up 59 million year-on-year, broadly in line with the increase in operating margin, or plus 18.6% with the margin improving from 8.1% to 9.5%. Below recurring EBIT, after adding positive non-recurring items, lower than last year because of the APG SGA gain in 2024, and a small impairment, EBIT reaches €431 million, up plus 5.5%. So in summary, this slide clearly confirms that we are not only growing our EBIT, but also delivering solid operating leverage at EBIT level on a recurring basis. On the next slide, page 20, you find the bridge in our net income group share. Two key numbers at the bottom of the table reported net income at $262.6 million plus 1.4% versus 2024, but excluding the APG-AGA capital gain in 2024, net income group share is up plus 22.8% in 2025, globally in line with our recurring EBIT. Between EBIT on the top of the slide and net income at the bottom, the main points are a better financial result as we no longer have the 22.6 million one-off on a loan in China, and we benefit from lower IFRS 16 discount costs due to lower lease liability, partly offset by lower interest income after the bond repayment in October 2024. Higher tax charge as well, reflecting our improved results with an effective tax rate around 25.6%, against 20.8% in 2024, which benefited from the non-taxable capital gain from APG SGA. Adjusted from that, 2024 effective rate would be above 24%, so close to 2025 rate. Moving now to cash generation, as you can see at the bottom of this slide, 2025 is record year with a free cash flow of 342.9 million, a positive variation of 111 million, almost plus 50% versus 2024. The main drivers of this increase are in the middle of the table, higher operating cash flow from 50 million, directly linked to the improvement in operating margin. Below the operating cash flow, a positive contribution from working capital of 33 million, in particular from lower inventories, mainly thanks to inventory optimization. And finally, a disciplined capex allocation with net investment down to around 7.5% of revenue, while still keeping a strong focus on digital, which represent close to 40% of net capex. It is to be noted that the impact of factoring on working capital variation is negative by 5 million as we did a lower volume of factoring at your end than in 2024. We did 272 million versus 277 million in 2024. And also to be noted, a strong free cash flow generation before working capital variation as it reached 284 million. So in summary, this slide shows that our business generates strong operating cash flow and we continue to be disciplined on capex and working capital. On slide 22, on the left bar chart, you see the evolution of the net debt, excluding SIS16. It goes down from $766 million to $587 million, a reduction of $169 million, mainly thanks to record free cash flow, partly offset by dividends, Bolton M&A, and share buybacks. This gives us low leverage with a net debt around 0.7 times our operating margin. On the right side of the slide, you can see appreciate a very solid financial profile, 1.3 billion cash, 825 million unrolled credit facility, 1.9 billion gross debt, 3.1 year average maturity, 3.4% financial cost, and 91% of our debt, which is on a fixed rate basis. Finally, on the last slide, we present our recommendation for 2025 dividend. Given our strong 2025 result, record free cash flow and solid financial position, we will propose to the AGM to increase the dividend per share to 0.65 cents per share from 0.55 This is an increase of plus 18.2% globally in line with our underlying earning growth. It represents a payout ratio of around 52% of net result group share and about 40% of our free cash flow. As already indicated, our intention is to continue to gradually increase the dividend in the coming years, while maintaining a balanced cash allocation between CAPEX to support organic growth, targeted Bolton M&A, and an attractive and sustainable shareholder return. That's all from my side on the financial, and I now hand over to Jean-Charles for the outlook.