CORRECTED-UPDATE 1-JCDecaux growth hit by reliance on recession-hit Europe – Reuters

(Corrects to Q2 from Q1 in eighth paragraph, adds verb)

* Growth hampered by tough conditions in Europe

* Olympic lift not enough to offset slowdown

* Q3 organic growth to be similar to Q2

* Shares down 10 percent

PARIS, July 30 (Reuters) – JCDecaux said it saw
demand for its outdoor advertising slow in the second quarter in
recession-hit Europe, which accounts for the bulk of the French
company’s sales, sending its shares down 10 percent.

The world’s top outdoor advertising group said it did not
expect an improvement in the third quarter because the London
Olympic Games would not prove enough of a boost to combat a
decline in sales in Europe, which provides roughly 70 percent of
the company’s revenue.

Unlike in past quarters when Asia was enough to drive
growth, the 4.2 percent sales decline in the first half in
Europe, excluding France and the U.K., overwhelmed the 10.7
percent rise in Asia.

Notably, the slump is now expanding outside southern Europe,
where Greece, Spain and Italy have struggled with debt crises.

“The market conditions have worsened in certain countries of
northern and central Europe, including Germany,” said
Jean-Charles Decaux, chairman and co-chief executive on a call.

“Europe is in a rough patch, but our emerging markets are
still performing well.”

JCDecaux, which competes with smaller rivals Clear Channel
Outdoor and CBS Outdoor, signs contracts with local
authorities to put ads on bus stops, in metro stations, airports
and other public spaces, as well as selling billboards.

Second-quarter sales were 671.2 million euros ($ 830.3
million), with organic growth of 0.2 percent, lower than the 3.3
percent in the first quarter.

The results missed the French company’s guidance given in
May for 1 percent organic growth, which had been seen as too
prudent by the market.

Billboard sales and ads in transportation hubs such as
airports were particularly weak.

For the third quarter, the group predicted organic growth on
par with the second quarter.

Exane BNP Paribas predicted the results and cautious
guidance would lead analysts to reduce their predictions for
earnings by up to 10-12 percent. “This is a rare but genuine
miss. We knew April-May trends had been tough but we were
expecting some relief in June.”

Before the release of the results, the stock had risen 2.6
percent this year compared to an increase of 8.94 percent in the
media sector index. The shares had also been on a run in
the past month, climbing nearly 10 percent.

Market research group Zenith Optimedia has
forecast 2.4 percent growth in outdoor advertising this year,
while global ad spending is set to grow by 4.3 percent.
($ 1 = 0.8084 euros)

(Reporting by Gwenaelle Barzic,; Writing by Leila Abboud,;
Editing by Erica Billingham, Helen Massy-Beresford and Louise
Heavens)