Ladies and gentlemen, welcome to the JCDecaux 2022 half- year results presentation. I will now hand over to Jean-Charles Decaux, Chairman of the Executive Board and Co-CEO. Sir, please go ahead.
Good afternoon, everyone. Good morning to those of you in the U.S., and welcome to our 2022 half-year results conference call, which is also being webcast. The speaker on this call will be Jean-François Decaux, Co-Chief Executive Officer, David Bourg, Chief Financial, IT, and Administrative Officer, and I. Rémi Grisard, Head of Investor Relations, is also attending today's conference call. In the first half of this year, we have continued our rebound with metrics that are all improving significantly compared to a first half 2021 that were still very difficult due to COVID-19. Revenues grew by 36.3% and 31.7% organically year-on-year. We have again achieved a strong operating leverage, thanks to an ongoing tight management of costs that has allowed us to maintain the increase in the cost base at a much lower pace than the revenue growth.
Our operating margin reached EUR 182 million. Our EBIT improved by close to EUR 150 million, and our net income improved greatly, although it remains slightly negative. Our free cash flow improved also with rising funds from operation as the activity picked up, combined with our cautious management of CapEx and contained working capital variations despite the strong revenue increase. Our total debt is thus close to EUR 200 million lower than last year at the same time. David Bourg will give you more details later in his presentation of our financial results. Moving to the next slide, you can see that our activities have continued to grow significantly compared to last year at 31.7% organically in H1. Of course, the comparison base was not the same for Q1 and Q2.
As a reminder, there was a significant improvement of the sanitary situation with the progressive rollout of the vaccine from Q2 last year. Our performance was above our expectation in Q2 at 21.6% in organic revenues. This shows you that despite the mobility restriction in China, slightly more important than expected when we gave our guidance, our momentum was very strong in all other regions, despite the war in Ukraine and the macroeconomic situation. This shows, once again, the strength of our media, especially once restrictions are lifted. China has had a significant impact, as you can see, as outside China, our group revenue growth was 43.1% for H1, close to 10 points higher. As you can see on slide five, all segments have recorded high growth rates in H1.
Street Furniture has grown the most, 37.6% organically year-over-year, thanks to its geographical footprint, to urban audiences normalizing, and to the good momentum from digitization and strong demand from advertisers for this media. Transport grew also strongly as air transport was naturally picking up in most regions with easing sanitary restrictions and a very strong will to travel again. But the Transport had a more differentiated performance between quarters, as it grew by +46% in Q1, but grew only by 12% in Q2 due to the impact of lockdowns in China. As you know, all major part of our revenue from China comes from transport activities.
Billboard, smaller at the moment for our company, as you know, remains well-oriented, especially in the countries where it is the most digitized, Australia, where it is above 2019 revenues, and in the U.K. All regions grew strongly in H1, except Asia-Pacific, which was affected by mobility restriction in China and by some restrictions in Australia. North America is back to a high growth with increase of air traffic on the end of the effect of the loss of our New York airport contracts. Europe is the strongest performer and is back to levels close to 2019 revenues as a whole and above 2019 for the Street Furniture activity. Some countries in Europe, including Germany and the Netherlands, have traded above the revenue levels of H1 2019.
This is very promising and shows you the strength of our media has not been diminished by the COVID crisis and that our growth drivers, including digital, can enable us to offset some of the headwinds due to the current context. Asia-Pacific is down single digit due to its high share of transport activity impacted by mobility restrictions this semester. Due to its faster growth, Street Furniture continues to make up that more than 50% of our revenues, while Transport from a typical 40% level has been reduced to 31%. Whereas before the COVID, close to 50% revenues came from Europe. These figures has reached 59% in H1 due to the rebound of Street Furniture, especially in Europe, and the impact of mobility restriction in Asia-Pacific. Rest of Europe is now our top region at 30.4% of our revenues.
Asia- Pacific remains the second region at 21.5%, and France is now again our first country. China made up only a bit more than 10%, 10.5% of our revenues in H1 2022. Looking at our clients now, our client portfolio is diversified, with the top 10 clients representing close to 13% of our revenues. As you can see, all top 10 sectors were growing. You can see that our clients mixed by sectors appear to be pretty solid in case of inflation or other macroeconomic concerns, as our biggest category remains fashion, personal care and luxury goods, with 16.5% of total revenues ahead of retail now at 13.6%. Entertainment, which is evolving fast moving from theaters to streaming platform and video games, as on the ad pictures, is the fastest growing sector at +78%.
Internet and finance are also growing more than 50% year-over-year. Internet, a very data driven sector and expert in advertising, is now clearly above 2019 revenues level, which is again demonstrating the strength of our media. Digital Out Of Home grew by 80% in H1 to reach a record level of 30% of group revenues as we continue to roll out digital screens, especially in Street Furniture, to develop our data capabilities and to improve programmatic buying. Digital revenue breakdown was very much in line with our business mix, which was not the case before. We will, as usual, continue to digitalize actively the most premium location of our inventory. Digital Street Furniture is the activity where the share of digital increased the most as we have continued to increase. As discussed, our digital inventory despite COVID-19.
Technical innovation has clearly enabled us to integrate more efficiently screens in outdoor environments, a solution which is not only appreciated by the advertisers, but as well by city officials which are relying more and more on this digital technology to convey efficiently their messages for the benefit of citizens. For digital transport, the digital contribution had decreased slightly during the pandemic due to higher reactivity of digital bookings compared to analog. Now the natural growth of the digital contribution is back on this segment, should remain the most digitalized of all, as it offers many premium locations. We continued to develop our digital capabilities, such as this picture of the first programmatic campaign at the Heathrow Airport in the U.K. Digital billboard continues to grow strongly, as you can see in slide 12. Digital remains the key growth driver in winning formula for billboards.
It enables us to be more reactive with more advertisers, to identify, sorry, our network to create scarcity. The U.K. and Australia, as pictured here, are the most successful countries in this regard. Five countries generate 69% of digital revenue in H1 2021. About 2/3 of our digital revenues is coming from five countries only, which are the U.K., the U.S., Australia, Germany and China. While the U.K. and U.S. are highly penetrated at 74% and 65% respectively, Germany and China are only 32% and 18%. The strong disparity in digital penetrations, even among our top countries, shows you that we have a lot of room for growth in the future. The activity in terms of tenders clearly picked up in H1, and we have had a good success rate.
We have recorded important wins of contracts in H1 with in terms of new contracts in Australia, [North America] and in Hong Kong, the tram shelters. For renewals in France, the most automated public toilets in Paris announced on Tuesday, Street Furniture in Aix-Marseille, Dresden in Germany, and significant renewals in China in the airports of Beijing and Chengdu. We have also renewed our contract for 13 lines of the Shanghai Metro on top of the five newly constructed lines that we have announced at our full year results presentation in March. We thus strengthen our footprint in the largest metro system in the world and reaffirm our leading subway operations in China. We will make an upfront payment for the advertising rights, which is in line with the amount paid before for the previous contracts per year of operation.
The contracts will be operated through a 60/40 joint venture with Shentong Metro. Our financial solidity and our track record with the Shanghai Metro have enabled us to renew this contract with satisfactory conditions after our full tender processes, even though we were not the highest bidder financially. The contract will include a high share of digital revenues with innovative displays, including curved displays, as you can see on this picture. About these tenders, we would like to stress again that we remain strongly committed to ESG goals, which are part of our DNA since the creation of our company. ESG criteria are still not considered enough in the tenders from cities and from other partners. Only 36% of tenders have assessed environmental criteria. Only 10% of tenders have assessed social criteria.
In France, the law on climate and resilience will make them compulsory in public tenders in 2026. ESG has a cost and brings value and should be included in all tenders in line with the financial criteria. Our recent renewals in Marseille and Aalborg are good examples of tenders including ESG criteria. Up to 90% of the scoring was non-financial in Aalborg. We can see that when we are seriously considered, it is a clear competitive advantage for JCDecaux. Very encouraging but too slow at this stage. The emergency is now, and it is time for public procurement to act sooner than later. We have also in these first semesters unveiled our 2030 ESG roadmap in March.
We communicate, we communicated on it externally as well internally during the whole semester, and we have continued to deliver on these different objectives in three categories, more sustainable livable living spaces, optimized environmental footprint, and responsible business environment. This includes projects on eco-design, biodiversity, code of ethics , and improved work environment. Our ESG performance is clearly recognized by the different ESG agencies as best in class in our industry. I will now hand over to David for comments and presentation about our financial performance.
Thank you, Jean-Charles. Hello, everyone. Happy to be with you this afternoon to report on our H1 financial results. To start this financial presentation, I would like to come back first on the summary of our financial results. As you can see on this slide, page 19, a set of results marked by a significant improvement of all our KPIs over the period, reflecting the continued rebound of our activities, although we are still behind 2019, our record year. A significant improvement indeed in our revenue at +36.3% year-on-year, +31.7 on an organic basis, despite the situation in China, the war in Ukraine, and the macroeconomic uncertainties.
No impact from change of perimeter over the period, but positive impact from FX of EUR 49 million with no material effect on our margins as our operating expenses are mainly in local currencies, providing us with a form of natural hedging. A significant improvement in our operating margin as well by EUR 152 million to reach EUR 183.6 million, almost +500% year-on-year, reflecting a good operating leverage, but I will come back on it in the next slide. A significant improvement accordingly in all our operating key operational metrics by more or less EUR 150 million, leading to an EBIT and net result slightly negative, almost breakeven at this level of activity, but with the funds from operations turning positive at EUR 80.7 million.
An improvement of the free cash flow of EUR 20 million due to an ongoing selective CapEx allocation and a contained working capital requirement, despite a significant increase in revenue of almost EUR 400 million. Finally, a significant improvement in this net financial debt, decreasing by EUR 186.4 million compared to June 2021. Having a look now to the evolution of the operating margin, page 20, the significant rise by EUR 152 million from EUR 31.4 million in H1 2021 to EUR 183.6 million in H1 2022 that we can see on this slide reflects the strong operating leverage, mainly due to a cost base under control, growing at a much slower pace than the revenue growth.
For a revenue growth of 36.3%, rents and fees and other operating costs, including staff costs and overhead, increased by +28.3% and +17.2% respectively. In the context of the pickup of our activities and the end of most rent reliefs, mainly on roadside activities and government aids linked to COVID-19, this illustrates that our costs remain well under control despite the inflationary pressures. On the next slide, we can see that, the EBIT has increased by EUR 148.5 million in line with the operating margin improvement. The charges between operating margin and EBIT, mainly amortization, maintenance, spare parts, and provision, were globally stable year-on-year.
EBIT was nevertheless slightly negative at EUR -14.9 million, mainly due to the seasonality of our activity, less important in the first half of the year, while amortization of our investments are quite straight lining over the period. Next slide. As a consequence of this good operating leverage, our margin ratios improved significantly overall and across all business segments. Regarding the operating margin ratio, on the left-hand side of the slide, it represented a 12.4% overall against 2.9% in June 2021, an enhancement of 950 basis points. Transport and Billboard improved more moderately, obviously, as the revenue growth was lower, but the ratio turned positive at almost 5%. For the Billboard, the enhancement by 890 basis points was mainly driven by the countries the most digitized, meaning Australia and U.K.
As far as Transport is concerned, the ratio enhancement is impacted by the situation in China, with the operating margin declining due to the mobility restrictions in Q2. Finally, Street Furniture operating margin ratio is increasing by more than 1,000 basis points to reach 19.1%. Regarding now the EBIT margin on the right-hand side of the slide, it improved in line with the operating margin, but more significantly, mainly due to a much lower base. Also, the overall EBIT margin is still negative. It is worth noting that the Street Furniture EBIT margins turn positive versus H1 2021 to 2.9%. Let's move now to the net result, page 23.
As you can see on this bridge, the improvement in the net result by EUR 142.6 million mainly comes from the EBIT improvement that I have just commented. You can note on this bridge that the corporate tax, which is an income of EUR 32.7 million, was stable year-on-year, while we could have expected a decrease along with the improvement of our operational performance. This is mainly due to the reversal of the provision on deferred tax assets in the U.S. for EUR 28 million due to the improved results and outlook in this country. Regarding the other financial results, the net increase in financial charges by EUR 4.6 million is mainly due to the EUR 500 million bond placed in January 2022 and the impact of the inflation on discounting charges on dismantling provision and employee benefits.
The net result of group share is therefore almost breakeven, slightly negative at EUR -11.9 million, which is quite encouraging for the rest of the year due to the seasonality effect that I have mentioned at the EBIT level. Moving now to the cash flow statement, page 24. We can note first a positive funds from operation at EUR 80.7 million against a negative one at EUR 56.2 million for the same period last year. A positive variation of EUR 155 million in line with the operating margin improvement. Regarding the lines between operating margin and funds from operation, the increase in maintenance, spare parts, and tax by EUR 4.9 million and EUR 11.5 million, respectively, is due to the rebound of our activity.
The improvement in the line other items for EUR 20.7 million is mainly due to the increase of dividends received from equity affiliates as their results have improved in 2021 with the recovery of the activities and to some one-offs in 2021 not repeated in H1 2022, such as some restructuring costs. Just below the funds from operation, working capital requirement had almost no impact on the cash position over the period, EUR -1.4 million, despite a significant increase in revenue, thanks to a tight working capital management, especially over the cash collection, with a decrease of the DSO by 10 days compared to 2021. Finally, after our net CapEx at EUR 122 million, free cash flow was at EUR -43.1 million over the period, an improvement of EUR 20 million compared to H1 2021.
Net CapEx increased by EUR 62.6 million compared to H1 2021, but includes EUR 42.3 million of the net upfront payment for advertising rights related to the renewal and extension of our long-term partnership with Shanghai Metro that has been presented by Jean-Charles. As you can see on this slide, this specific payment, excluding this specific payment, the increase in net CapEx is limited to almost 34% year-on-year, in line with the pickup of our activity. Renewable CapEx is flat versus 2021, and the net CapEx to sales remains at about 5.5%, while it is at 8.3%, including the upfront payment on Shanghai Metro.
To be noted that the advertising rights remaining to be paid on Shanghai Metro amounts to about EUR 100 million. EUR 42 million will be paid in H2 2022, and about EUR 58 million in 2023. Turning now to our financial debt, page 26. It is at EUR 976.9 million at the end of June 2022, an increase by EUR 52.4 million compared to December 2021, mainly due to the negative free cash flow of EUR 43.1 million that I have just commented, and the financial investment over the period for EUR 13.6 million.
EUR 6 million for the acquisition of the stake of one of our minority partners in U.A.E., and EUR 7 million for the payment of part of the remaining amount due on our stake in our JV in Beijing Metro following the restructuring implemented in 2020. Compared to June 2021, the net debt, as I said in introduction, decreased by EUR 186.4 million, reflecting the strong cash flow generation over the last twelve months. Finally, this slide to conclude the presentation, the financial presentation, to give you a quick update on our financial structure, which is very strong, with, as you can see, on the left side of the slide, a solid profile of our debt maturity with an average maturity of 3.5 years.
The cost of funding already secured with 90% of the debt at fixed rate, protecting us against rate increases over the next few months, and a very strong liquidity with EUR 2 billion cash as of June 2021, plus EUR 825 million committed revolving facility, which is fully undrawn. The financial structure, which was reinforced, as you know, in January, when we decided, given the macro uncertainties, to take advantage of the good market conditions to issue a EUR 500 million bond with eight-year maturity and a coupon at 1.6%. On that note, I leave the floor now to Jean-François for the outlook and strategy of the company.
Thank you, David. If we take a step back, we believe the fundamental growth drivers of Out-of-Home media remain very strong. First, the urbanization remains a major trend worldwide, with already 56% of the world population living in urban areas. Second, the quality of our media stands out in the current media landscape. Out-of-Home is a very powerful media to reach young, wealthy audiences that are not using other traditional media and for brand building. That is why we are very attractive for premium and growing sectors such as luxury brands as well as for internet companies and startups. With Digital Out Of Home, as you know, we now add flexibility and targeting for branding. Third, mobility will continue to recover and rise. Everybody wants to travel as much as possible currently. Besides air travel, people are overall on the move.
Time spent out of home continues to grow, and we are, as you know, positioned everywhere to capture this moving audience from local places in city centers, retail areas, to short and long hauls with billboards on the roads, train stations and airports as well. All in all, we are the structurally growing media, as acknowledged by recent independent market studies, at 17% compound growth for annual growth for Digital Out Of Home, not far behind online, and at 8% growth, annual growth for Out-of-Home as a whole in the coming years until 2024, according to the latest estimate from Zenith in June, which takes into account the current macro context. On slide 30, the airport recovery is more and more visible. As you can see, North America is only at -10% below 2019 levels, including both domestic and international flights.
We are at 90% or even 95% of our airport advertising revenue compared to 2019. Regarding Middle East, air traffic is at 75%, catching up very quickly, and our airport advertising revenue is already above 90%. Asia is still lagging for obvious reasons. Let me remind you that at the end of last year, before the renewed lockdowns, domestic air travel in China was above 2019, with our advertising revenue in Chinese airports being very close to 2019, excluding international terminals. This is very promising for the potential of the airport advertising business. Full airport recovery globally to 2019 levels in terms of numbers of passengers is now projected for the end of 2023 by major forecasts sooner than before.
On slide 31, as you know, our digital strategy is based on three pillars. Our digital rollout, programmatic to optimize the trading through a real-time bidding platform, but also data which is key to increase the accuracy of measurement and the efficiency of campaigns that are more and more data-driven. In this ecosystem, we continue to invest in data. We have more than 60 people dedicated and centrally for building our data-driven solutions, and all this data science is used for programmatic campaigns. Moving on to slide 32. Programmatic is a very strong opportunity. As you know, the total Out-of-Home revenue pool stands at about $40 billion globally, whereby programmatic online advertising is worth close to $150 billion and growing at 15% year-on-year.
It is already 70% of global online advertising and 90% in the most advanced countries such as the U.K. We can access this revenue pool as programmatic trading in Out-of-Home has many benefits for advertisers. It is more quickly traded, and it can be automatically adjusted depending on triggers and efficiency metrics. Moving on to slide 33. We have now 11,000 screens which are connected via VIOOH, which is an SSP platform in 17 countries. In H1 2022, we've already launched programmatic in Brazil and at Heathrow Airport. Revenues are growing fast, 2.4x H1 2021 versus the same period last year. They stood at around EUR 30 million in full year 2021 as a reminder, and we expect to grow significantly over the coming years. The VIOOH platform is today the most connected platform in the out-of-home media world.
They have more than 150 staff working in London to build the best platform open to third parties for the benefit of advertisers and out-of-home media firms. Moving on to slide 34. With programmatic, we can target the long tail of advertisers with which we are not very active in out-of-home traditionally. New money makes up the majority of revenue so far, more than 80% in the U.K., for example, for JCDecaux. This broadened client universe increases demand and should generate higher prices for our digital inventory. You have here three examples of campaigns with different types of targeting, mainly based on mobile data, budgets, adjusting automatically and different types of trigger events. Moving on to slide 35. Platforms are a way to offer our inventory more directly to advertisers.
Through a partnership with Displayce, which is a leading demand side platform called DSP, including a major stake, we will add an important brain to our offer. Displayce will remain independent and open. It will continue to give access to 600,000 screens, including JCDecaux, but also many other out-of-home media companies. For us, it will be a way to offer a complete buying path to advertisers from the DSP to the SSP, and to continue to evangelize the market to develop the programmatic ecosystem, which in the end will generate through growth more revenue for out-of-home media owners, in our opinion. Moving on slide 36, called main tenders. The activity in terms of tenders is speeding up clearly with higher visibility after COVID-19.
ADP Group and the advertising railway franchise in the Netherlands are among the important tenders live at the moment, most of them into an important share of digital, as you know. Moving on to slide 37. The competitive landscape on slide 37 hasn't changed. We are, as a reminder, the clear leader of out-of-home media. Besides out-of-home, we are the second-largest European media owner and among the top 15 media owners worldwide. Our unique worldwide position will, in our VIOOH, become more and more differentiating in the age of digital and programmatic. The current macro environment might bring opportunities for consolidation, but more important for market rationalizations.
We will continue to be pragmatic in terms of acquisitions and to monitor the competitive situation, sizing opportunities when they come, but bearing in mind that there is no must do deal for us and that we will still have a lot of organic growth opportunities ahead. In conclusion, I would like to highlight the following. Our strong revenue growth despite a difficult environment with a strong rebound of revenues despite mobility restrictions in China with Street Furniture already back to pre-COVID levels. A strong operating leverage with a significant improvement in operating margin and positive funds from operations, a decreasing net financial debt. Second, we continue to focus on our key priorities. Our digital transformation selectively develop the Digital Out Of Home media inventory, putting data at the heart of our business development, expanding new sales channels, including Digital Out Of Home programmatic ecosystem.
Further organic growth through tenders and consolidation opportunities, and a very strong commitment to ESG with our ESG roadmap 2030. Finally, we are well-positioned for the recovery with a unique worldwide leadership position, a well-diversified geographical and advertisers exposure. We are the most digitized and data-driven global out-of-home media company, and we focus very strongly on innovation. Lastly, our outlook for Q3 2022. As far as Q3 is concerned, organic revenue growth rates continue to be either high single digit or double digit in most countries. While in China, our advertising revenue remains negatively impacted by mobility restrictions. We now expect an organic revenue growth.
At a rate of around +7% with EBIT financial revenue above the same quarter of 2019. Thank you very much, and we are now ready to take your questions.
Thank you. Ladies and gentlemen, if you wish to ask a question, please dial zero one on your telephone keypad. Thank you. We have a first question from Sarah Simon from Berenberg. Please go ahead.
Yes. Afternoon. I've listened to a lot of results calls today, so apologies if you've actually said the answer to this already. Can you just confirm, you said China's negatively impacted by the lockdowns. Do you mean that China is negative year-on-year in Q3, or just that it's underperforming, the rest of the group, which is obviously doing very well? Thanks.
Good afternoon, Sarah. Thank you for your questions. Yes, China, if things continue like that, will be negative year-on-year. That could change obviously overnight because as you know, lockdowns are black and white. Once the lockdowns are lifted, basically the business comes back relatively rapidly, especially in the transport environment, especially in the metro environment. Business is back much more rapidly in metro than it is in airports. Yes, we confirm that so far the business continues to be year-on-year negative versus last year.
If you look at kind of where you're trading now versus where you were in Q2, there have obviously been, theoretically, if we read the press here, which may or may not be true, some relaxation in China since the end of the quarter. Have you seen that translate into less bad trading in China or is it not having an effect yet?
No. We have seen some, I would say, green shoots, but not really so far meaningful except Hong Kong, where the business is really picking up obviously since the measures were relaxed some weeks ago. It's to be seen. But now that Shanghai is basically the lockdown is lifted, the audience in the metro system is back. We are seeing basically an improvement in our basically daily trading conditions. Yes, business is slightly improving, but it really much depends on how fast and if the lockdown lift will remain in the future.
So that's where we have some basically we are at the moment monitoring carefully the situation, but business should improve in the weeks to come and is improving as we speak, slowly but surely.
Okay, great. Thanks a lot.
Thank you. We have a next question from Catherine O'Neill from Citi. Please go ahead.
Great. Thank you. I've got a few questions actually. One was on 3Q again. I just wondered what kind of visibility you've got through the quarter, especially into September, which I guess tends to be one of the larger months within the quarter. Within your 3Q guidance, how much of a drag is China? So if you were to look at your 3Q guidance ex- China, what kind of number would we be looking at? I'll start with that and then I'll come back with some of the others.
Yes, you're right, September is our biggest month in the quarter, that's for sure, can confirm that. We can confirm that. Visibility remains quite basically in line with the historical numbers, so four to six weeks, no more than this as we speak. We will not be disclosing basically the breakdown within the guidance of around 7% growth, especially on China because as it was answered to the Sarah Simon questions previously, it's very difficult to do the right assessment in the Chinese situation because of the lockdown that are lifted basically or re-reinforced.
So far we think that the situation is gradually improving slightly in the Chinese context as it was said, and the rest of the regions are really trending, I would say, in a robust environment. Even though last year at the same time the business were already rebounding quite strongly. All the regions are doing well for the Q3 numbers. The Chinese situation remains basically obviously quite negative given the situation. We can't disclose to you as we speak the numbers of the Chinese situation for Q3.
Okay. The other thing I wanted to ask about is cost. If you could just go into a bit more detail on what you're seeing on the cost inflation side of things, and specifically if there's any elements of your cost base are inflation linked and how we should think about that feeding through.
Yes, David?
Yes. Thank you, Catherine.
No, as you can see so far, we have not been affected too much by the inflation, even though our cost base has increased year- on- year by the percentage points I have mentioned during the presentation. This is coming mainly from our staff cost and overhead from the government aids that we obtained in 2021 and 2020, which are almost not anymore in 2022.
It's clear that we are mainly exposed on inflation on our operating expenses, excluding rents and fees, because when you look at the structure of our rents and fees, the major part of it is fixed, and only 1/3 of our fixed rent pool is linked to inflation. About 10% or 1/3 of this 1/3 is the inflation is capped. On our rents and fees, 70% is fixed, 30% is variable, linked to the revenue variation. Rents and fees represent about 55% of the total OpEx. I have to say that we are not too exposed to the inflation.
Regarding the rest of our operating expenses is for the moment under control, but we are not completely immune, for sure. We are looking at it very carefully. Keeping in mind, you know, the savings that we had in 2020, and especially the structural savings that we had in mind after all the measures that we implemented to face the COVID situation, we saved about EUR 80 million-EUR 100 million due to the inflationary context. There is a probability that we cannot fully keep a 100% of those savings when the revenue will be back to normal.
Okay, thank you. On CapEx, I think you mentioned the cost of the Shanghai Metro upfront payments. Could you just give us a sense of how we should think about CapEx for the second half or for this year overall, given there's a number of new contracts that have come in on stream?
No, as we said on the call this morning in French, we see the CapEx for 2022 landing between EUR 300 million-EUR 350 million. For 2023, we are not providing any guidance and it will depend a lot on the new contract that we will secure. It's not possible for the moment to give a serious forecast. We are still working, you know, on the same range of CapEx to sales between 6% to or 7%-10%. More on the high end of the range, due to the fact that we have postponed some commitment over the last two years.
This is the envelope on which we are working for 2023, without providing any guidance, obviously, at this stage. It's too early to say.
Yeah. Sorry, my final question is on debt, where you got a relatively large gross debt balance. I don't think I caught. I think you did mention it earlier, but I didn't catch what proportion of that is fixed versus floating rates, and if there's any implications for interest costs as rates rise.
No. We have. I think I mentioned it, more than 90% of our debt, which is at a fixed rate, with an average duration of 3.5 years. Meaning on our financial cost, we are quite well protected against interest rate increase in the next three to four years, I have to say. Yeah, I don't know if I have answered your question, but.
Yes. No, that, yeah, I just didn't catch the number you said earlier, so that's great. Thank you very much.
Maybe last point on your question on inflation is regarding CapEx. Yes, we are obviously exposed, like everybody on our CapEx, to inflation. As you know, we are a long-term business, long-term contract. We are depreciating our CapEx over 15 or 10-20 years, which allow us to get some protection of CapEx related to inflation.
Thank you. We have a next question from Conor O'Shea from Kepler Cheuvreux . Please go ahead.
Yes, thank you. Good afternoon, everybody. Three quick questions from my side as well. First question, first, probably the first two questions, for David. I think, David, you mentioned government aid that you had received, along with a lot of other companies during the pandemic in 2020 and 2021. Can you remind us of the amount, please? And then second question on the margins.
Obviously a lot of moving parts, as usual, from the visibility that you see for Q3 and the mix, and the tougher comps in Q4, if we assume a mid-single-digit growth in Q4, do you think overall that your margins will grow in the second half of 2022 versus 2021? The third question, just in terms of the current kind of disruption in the airport kind of experience for travelers, with you know, a lot of canceled flights and lost luggage and so on and so forth. How does that impact your transport business, if at all? Would be interesting to know. Thank you.
David, Conor. Good afternoon. David will take your first two questions, then I will take your last question.
Thank you.
Hello, Conor O'Shea. Regarding government aids, as you know, we didn't disclose the number last year. What I could say or compare, if I take what we got in 2021, you know, our operating expenses, excluding rents and fees, increased-
Right.
by about 17%. The staff costs increased by the same range. It's another way to answer to you, huh?
Uh-huh.
If we exclude the government aid that we got in 2021, and that we do not have anymore, the increase in our staff costs would have been 8%. So 50%-
Okay.
of what we have today disclosed in the numbers. It's another way to answer to your question.
No.
You can see that the impact was significant.
Yeah.
Now that we are coming to a more normal level, you can see that our costs remained under control. It is a way that I answered also to the question of Catherine. Regarding the margins, Conor, as you know, we do not provide any guidance on margins.
Mm-hmm.
As you know as well, we deliver a major part of our revenue in H2. Normally it's between, let's say, 54%-55% in H2 compared to 45%-46% in H1. Due to the fact that we are a business with a major part of our costs which are fixed. If the trading momentum, excluding China, continue as it is, and mainly on our Street Furniture business for the rest of the year, I will let you guess what would be the impact on our margins for the second part of the year, which should be positive.
Okay. Understood.
Regarding your third question, Conor, on the airport, let's say environment, post-COVID situation. First of all, I think this is something that we should all agree upon, is that basically recovery is much faster, stronger than everyone expected six months ago. That's part of the reason why you are, I think, asking also that question. That also one of the reasons why there is so much operational issues at the moment, is that the comeback is much stronger both in terms of quantity and also in terms of yield per seat on the airplanes and as well as also duty-free consumptions.
I think this will translate rapidly and that also, that this is also the case already in the United States, where, as you have seen in our basically announcement this morning, with 90% basically domestic travel back in the United States, we are already doing 90% of our revenue pre-COVID level. Even more impressive is in the Middle East, where basically we are almost to pre-COVID level in revenues, where the air traffic passengers are back to 75% to pre-COVID. It shows the strength of the industry, I think, despite the fact that everybody a year ago was saying life will be different, people will not come back as before.
People are coming back, not exactly as before, this is for sure, but the number of people and the quality of the people passing by the airports today is quite impressive. Now, having said that, I would say the disorder, the operational.
Mm-hmm.
The tension that you described in your question is real. I think we all have to both obviously at the first stage airport authorities and should really fix that rather rapidly because this is important for the morale of the industry. It's not obviously great news to see basically those operational issues, but I think airports are very conscious that this is important and that needs to be fixed. The good news is that the number of people is quite impressive coming back in airports. Once basically life is coming back to a certain normality, if I may say so. Even if you look at Singapore, for example, Singapore is today at 50% capacity versus pre-COVID, and our revenues are really ramping up very fast.
And faster than what we JCDecaux had expected even a month or two months ago. I think it's a reset, but it's more positive than negative, even though it's a point of attention for the whole industry as we speak, to make sure that the people that are passing by the airports are well welcome first and are well treated second, which is not exactly the case as we speak in most of the airports around the world. But I think by the end of the year that should be back to normal. Obviously, most of our partners are really working hard on this, and I can promise you that they are really conscious of the urgency of the situation.
Very fair. Many thanks.
Maybe one more comment on this. Don't forget that in the airport business, depending on the region around the world, the structure could be slightly different. Because it's an industry where most of the campaigns are booked on a yearly basis, on a quarterly basis, which is not the case on Street Furniture, which is not the case on the Billboard, with some exceptions around the world. In Transport, especially in airports, most of the big clients are committing themselves for the year. This is the case for skincare products, luxury brands, and basically leisure or other media. The other advertisers that are using the airport media as an important one.
Because last year the business was in trouble still in autumn 2021, they were not committed as they used to be in the past. We think that this year, which is starting now for the campaign of last quarter 2021, 2022 and first quarter in the year of 2023, things might be different for next year and will be different for next year. We start feeling basically the people coming back, especially in Europe, with the big luxury brands reopening basically, the airport channel, with obviously for the time being a question mark on the China situation. Obviously, but Southeast Asia is reopening, Bangkok is reopening, Singapore is reopening. Most of the Southeast Asian markets are reopening. This is good for luxury brands, as you, as we all know. Japan is reopening, Korea is reopening.
The U.S. is back to normal, or almost back to normal. I think the dynamic is good with the exception, obviously, of the quality of service that we referred to.
Right.
We are quite, I will say, optimistic about the 2023 as we speak, if things continue like this.
Okay. Understood. Many thanks, Jean-Charles. Our next question is from Nizla Naizer from Deutsche Bank. Please go ahead.
Thanks. I have a couple of questions. The first is on the organic growth outlook for Q3 and 7% factoring the China slowdown. But beyond China, I'm curious to understand, given how many industries you have exposure to, are there any sectors sort of rationalizing their spending on, you know, fears of macro slowdown, where they're worried that consumer demand would slow down and they're having these conversations with you about upcoming campaigns? Or is that something you're not really seeing? Just trying to understand how much of that is also factored in to your outlook in Q3. My second question is on your digital investments as well. What are you sort of investing on in terms of, developing the digital offering for programmatic buying, et cetera, that JCDecaux is offering?
Is that expense or is that capitalized, the size of the investment and what to expect in H2 on that would also be great? Thank you.
Thank you. Jean-François will take your first question, then David, the second one. Jean-François.
Yes. If you take a look at the breakdown of categories in our advertising spend, you will notice that all categories are up very strongly in H1. Your question, if I understand the question well, is whether some of the categories are slowing down in Q3. What I can tell you that it's not the case. We don't have a big exposure to FMCG, which, according to newspapers and, have reduced some of their TV spend, given the strong increase in cost of living. But we don't have that much of an exposure. And by the way, this category disappeared from the top ten is the automotive industry, simply because they are late in getting some components and they are not able to deliver the cars that have been purchased by customers.
As a result of that, we've had some campaign postponements from the automotive industry. This is the only category where it's hard to tell whether it's a postponement because of the spare parts, which is what we have been told, or whether it's because automotive sales are in many countries not doing so well.
For certain automotive companies, not all of them. With the exception of the automotive, all categories are up pretty strongly. The fact that our first category, luxury and personal care is now more than, it's our biggest category, and their sales are doing extremely well, as you know, the luxury sector. Their spend is increasing as well. A lot of them take the view that out-of-home is the best media for branding because of the fragmentation of the audience on even online. We see quite a strong trend from increased spend from the luxury sector.
Regarding your question on digital investment, 40% of our total investment more or less, it depends, but, for this first half is coming from digital. This part of the CapEx is composed by hardware. It is a major part of the investment. The other part is obviously the software part with our VIOOH initiatives, but not only. All the IT investment then that we are doing in our back office and front office tools in order to streamline our business processes. Regarding VIOOH, because I guess it was more your question, your question was more focusing on VIOOH. We are not disclosing the amount of CapEx that we are investing so far in this entity.
The amount that we are investing there are about 1/3 which is capitalized and the remaining part is more considered as OpEx. This is the reason why we are more looking at it as a cash out, but we are not unfortunately communicating on the amount or disclosing the amount.
Understood. Very helpful. Thank you.
Thank you. We have a next question from Jérôme Bodin from ODDO BHF. Please go ahead.
Quick follow-up on programmatic, and especially the acquisition that you made. Displayce, if my pronunciation is the right one.
Jérôme, we can't hear you. Sorry to interrupt you, but we can't hear you very well on this side of the call. Could you speak a bit higher, please?
Yes. Is it better now?
It is much better. Thank you.
Okay. Sorry. Yes, my question is on Displayce, the acquisition you made on programmatic, which is on the demand side platform, so on the buy side. You used to be only on the sell side. Could you elaborate a bit on the synergies between the two, between demand and the sell side? More generally, what brings you Displayce on your overall stack? My second question, it seems to me that your stack now on programmatic is almost completely full. Is it the case or should we expect further acquisition on programmatic? Thank you.
Thank you, Jérôme. I will take these questions, and I think your assessment is the right one. It means that first of all, I would like to remind basically all of you that through our programmatic strategy, we always said that we would like to create an open environment, obviously for basically the all outdoor sector and which we think more than ever before, it's appropriate to grow and further develop our industry in the future. Given the unique space, as it was reminded before, we are in basically now to advertising. We think the strength of our media is very strong in this new basically modern advertising.
We think that the SSP that we pioneer in VIOOH, which is an open and as independent as possible platform, is covering, as you said, the SSP. Displayce respond to the same logic to pioneers and foster and further develop basically a full stack proposition for the whole industry, not just for JCDecaux. As we know, we are in a fragmented industry. Yes, we are the worldwide leader. Yes, we are, we think, the most innovative basically player in the industry, and that's the reason why we think that we should basically push forward the boundaries of our industry through those initiatives instead of plugging us or plugging basically our inventory into third party operators.
Yes, now we think that we have a good ecosystem which is not completed yet because we are looking at the evolution of the industry. We think also, to answer your questions on the synergy, we think that on data obviously we will help and basically push forward on Displayce, but they will be autonomous. They will continue basically to operate the business. We will help them to push forward, to further develop, to strengthen from a human being as well as from, obviously, financially.
We think that they are already connected to roughly 600,000 screens around the world, 50 countries. If we have to recruit more people and grow the business, we think that the convergence will be made through also a much stronger data management platform to ease basically the access to outdoor. One of the key messages we want to convey to the industry is that we have to ease as much as we can the access to buy and basically book on outdoor advertising. That's the reason why our ecosystem, we think, we start basically pushing new clients, whereas we see today through VIOOH, but not only for JCDecaux, but also for other VIOOH partners. Basically, this is new money.
This is quite interesting because before we were not fishing basically into this programmatic pie. Because, obviously VIOOH now is responding to those programmatic basically advertisers that wants to use programmatic platforms. They are using it on digital. 90% in the U.K. is made through programmatic now, 70% in the online advertising. Why not a bit, let's say, in outdoor advertising? Even though the media is not exactly the same to digital online, obviously, but the strength of outdoor is unique. Scarcity, premium locations, major audiences growing in most of the environments, if we put on the side the COVID situation. Data now and targeting, much more accurate than before, thanks to technology and further investment, is really something that is now making our media a much more attractive media for advertisers.
That's the reason why basically we see new money coming in through those platforms and especially VIOOH. In this space, we think that they will continue to be run autonomously and develop their business, basically, with their different business partners in Europe, but also elsewhere around the world to have easy access and easy buying on outdoor advertising. We must continue to develop our ecosystem, but those are the pillars where we want to be in at the moment on the SSP and DSP and DMP going forward.
Thank you very much.
Thank you. We have no further questions for the moment. Ladies and gentlemen, if you wish to ask a question, I remind you need to dial zero one on your telephone keypad.
If there is no further questions, on behalf of JCDecaux, we would like to thank you for being with us this afternoon. We wish you a good break for those who are taking some days off in the weeks to come. We look forward to see you very soon. Thank you.
Thank you. Ladies and gentlemen, this concludes this conference call. Thank you all for your participation. You may now disconnect.