Shares in outdoor advertising giant JCDecaux dropped by over 8% on Wednesday morning after it highlighted a delay in a key Transport For London (TFL) contract in its quarterly report.
Also citing a “slowdown of the world economy,” the French company also predicted second quarter growth of just 3%, despite a first quarter adjusted revenue growth of 15.3% to €748.5 million (£591 million, $852 million).
Referring to the TFL delay, JCDecaux said that the “Street Furniture” network rollout — comprising of with 1,000 84ʺ screens all over London — “is taking longer than expected mainly due to the complexity surrounding the installation of this major construction project with the involvement of several contractual partners in the operational model from TFL.”
Street Furniture consists of objects, such as benches, bus shelters and columns, designed to integrate advertising.
The delay means JCDecaux has only installed 20 digital screens instead of the planned 300. It said the expected revenue loss would be “significant.”
The news triggered a lot of concern from analysts. HSBC downgraded the company from “hold” to “reduce” while Barclays set it to “underweight,” according to the Financial Times.
Jean-François Decaux, Chairman of the Executive Board and Co-CEO of JCDecaux, remained confident about the company’s ability to cement its position as market leader:
“Looking forward, we remain convinced that out-of-home retains its strength and attractiveness in an increasingly fragmented media landscape. With our accelerating exposure to faster-growth markets, our growing premium digital portfolio combined with a new data-led audience targeting platform, our ability to win new contracts and the high quality of our teams across the world, we believe we are well positioned to outperform the advertising market and increase our leadership position in the outdoor advertising industry through profitable market share gains.”
Here’s a look at JCDecaux’s share price drop as of 10:05 AM GMT:
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