At this time, it's my pleasure to hand over to Mr. Christian Schmalzl from Ströer. Please go ahead, sir.
Ladies and gentlemen, dear analysts, thank you for participating in today's call for the publication of our Q2 H1 figures. I'll begin the presentation with a brief overview of the key figures. Afterwards, I'd like to look at the strong momentum of our core out-of-home business and especially digital out-of-home, the key value driver of our company. Henning will then comment on the developments and effects of our Q2 figures in more detail. This will be followed by remarks on what we expect for the third quarter and the remainder of the year. As always, we are looking forward to your questions after our presentation. With that, let us start the call with a short overview of H1 2024 and the Q2 market dynamics. We've already shown you this chart in a similar form in the previous quarters.
In principle, they all had in common that the German advertising market is gaining more momentum again in the last quarters, and that Ströer has clearly outperformed the market, the competing advertising categories, and its peers. Nothing fundamental changed in this respect in the second quarter and the first half of 2024. Out-of-home advertising is by far the fastest growing category in the German advertising market. Out-of-home grew by around 18% in the second quarter of 2024 financial year, outperforming TV and print significantly by 8 and 17 percentage points, respectively. Our digital out-of-home business grew net by 29% and was once again the product with the strongest momentum in the market. It's important to mention that Nielsen's market figures are inflated by around six-seven percentage points, as Nielsen reports on a gross basis.
The out-of-home segment performance was 21%, which reflects growth of our classic out-of-home business of 21% in the same period. So how does this strong relative performance translate into our H1 P&L? As expected, the already strong development of the first quarter continued in the second quarter and even accelerated slightly. Overall, we were therefore able to achieve sales growth of around 12% to a new record figure of EUR 965 million in the H1. At 10.3%, organic growth was also in the double digit range. Henning will go into more detail in the financial section, particularly on developments in the second quarter. As we've already explained in previous quarterly calls, we expected EBITDA, EBIT, and net income adjusted to develop at a disproportionately high rate compared to sales.
When it comes to adjusted EBITDA development, easing cost pressure, as well as declining inflation, and in particular, the sustained positive development of our core out-of-home segment are key. An adjusted EBITDA growth of 16% from EUR 227 million to EUR 263 million is a perfect proof point for our expectations. This is even more evident in EBIT. Adjusted, we were able to improve this from EUR 84 million to EUR 130 million or 34% in the first half of the year, also due to the comparably stable IFRS 16 effects. Net income adjusted increased even stronger, from EUR 40 million to EUR 55 million or 37%. The development of cash flow in particular, reflects the strong performance in the first half of the year.
After a negative Free Cash Flow of EUR -16 million in H1 2023, we were able to improve this significantly to EUR +22 million. At EUR 41 million, CapEx in the first six months was 35% below the previous year's figure of around EUR 63 million and reflects the continued back to normal and the objective to further optimize and improve the fill rate of our digital portfolio. It's important to put the current development into a slightly broader context, especially the dynamics of digital out-of-home, which is the key value driver for our group. The pandemic, with the various lockdowns, pushed the last 12 months revenue of our subsegment down by roughly 35%. Also, the digital out-of-home business had fully recovered with the end of the last lockdown in 2021.
The following 6 quarters were strong, but still impacted by the war in the Ukraine, massive cost inflation, as well as the ad market crisis and the tobacco ad ban for out-of-home advertising. But in a more normalizing macro environment, since roughly one year, we see an acceleration of digital out-of-home, and the last 12 months, digital out-of-home revenue has doubled over the last 10 quarters. Consequently, the share of digital, which is our most profitable product category within our out-of-home segment, has nearly doubled from the beginning of the pandemic until today and will reach roughly 40% by the end of 2024. Assuming the current growth rates also for the coming quarters, our out-of-home business will be predominantly digital sometime towards the end of 2026. It's fair to say that the perception of our business will change completely over the coming two - three years.
There's a big difference between gluing paper on wood and having a growing number of screens on top, versus running a predominantly digital out-of-home business, which benefits from constant conversion of the next best location to digital in a relatively smaller classic business for local and regional customers on top. So looking through the bumpy last four years with various crises, our anti-cyclical long-term investment into digitizing our infrastructure clearly pays off. EUR 70 million CapEx before the pandemic were equivalent to over 8% of our out-of-home revenue at the time, where coverage of our Public Video network was only around 52% of the total population.
At the peak of the pandemic, the further ramp-up, especially roadside screens, has taken the net reach of our digital out-of-home business to 63%, but the investment level for the segment was around EUR 80 million and more than 10% of the pandemic-infected revenues. Today, we expect investments of around EUR 50 million for out-of-home for the full year, and thus slightly above 5% of the out-of-home revenue, while we are operating a network that reaches seven out of 10 Germans per month standalone. CapEx, as share of revenue, will continuously decrease year-over-year going forward. We invest less in relative terms, but focus more on real highlights for advertisers that drive the digital out-of-home category further. Just four examples that illustrate our line of attack.
Next year, we will launch the then largest screen in our network in the Hamburg main station with over 340 square meters. We are convinced that this location will get iconic status and boost the total digital out-of-home category top of mind of advertisers for quite a while. Since 2023, we have our green digital products in our network, where large format screens, roadside, are either integrated into vertical gardens or run, like the example you see, by solar panels directly attached to the screen. We are rolling out large format Motion Cubes since this year across various top locations to add real cut-through elements to our network, which allow advertisers to stage their brands.
Even if it's meanwhile almost a standard at New York Times Square or in Asian mega cities, we are working on both ramping up more hardware and software to enable more 3D installations through our Public Video screens, also for the German market. All of that is happening on top of an outstanding 70% nationwide audience coverage, which we also increase in parallel. As briefly addressed before, we optimize our footprint also for more specific target groups and locations, but follow a more demand-oriented approach. Similar to 2024, our CapEx plan going forward includes 400-500 additional premium screens, indoor and outdoor per year, and an ongoing diversification of retail and ambient touchpoint presence. We don't stop investing, but the vast majority of taking our product to a new level happened between 2019 and 2023.
It takes a while until the ad market adapts to new products, and in our case, the macro environment made it even tougher. But the overall ad market has recovered significantly for out-of-home, and the share of national advertisers has bounced back to the pre-COVID level. Our regional and local business was absolutely crucial to take us through the tougher times for national ad spend. But cost of sales for a local client is more than three times higher than for a national key account. At the moment, the strategic and ongoing shift to out-of-home, and especially digital out-of-home from national top brand, helps improving our cost of sales ratio. And still, 65% of our digital out-of-home inventory is filled with content, with news, with weather, with sports clip, and similar pieces of content.
So excluding the additional inventory coming from EUR 50 million out-of-home CapEx and the historic 5% price increase for digital out-of-home, we could almost triple the net extraction from the current network setup. We have strong and sustainable momentum across all client industries, but let's look at 4 cases that worked nicely in the last couple of months. Priorin from Bayer is a good example for growing business for with pharmaceutical clients. Many of them, like Priorin, focus on TV advertising, and our TV plus model merges TV audience data with a research specialist, All EyesO n Screens, with Public video data to add regionally targeted digital out-of-home to TV campaigns to ensure a balanced coverage of the campaign across all areas, down to zip code levels. Geo-fencing and local campaigning is another direction of developing business with clients, and Vodafone is a good case here for the telco industry.
Locally targeted digital out-of-home was supporting locally targeted mobile and social campaigning, and ultimately increased the click-through rates of social posts of Vodafone. So Public Video is strengthening brands and other media across the entire advertising funnel. Ben & Jerry’s from Unilever is a nice showcase for targeting features for FMCG brands. Different to the targeting limitations of TV broadcasting, we've integrated data sets of vegan audiences in our Public Video playout systems to promote new vegan ice cream flavors, and the cross-check with non-audience targeting show an audience uplift of almost three times because of the, by far, more focused use of advertising money only on screens and time slots, with over proportionate presence of the vegan target group. Amplifying mobile campaigns for retailers via Public Video is something we regularly do for different retailers like Douglas. This exemplary case you see, got recognized at various advertising awards.
The Public Video campaign of Deutsche Telekom during the UEFA Euro 2024 in Germany is maybe the most integrated example, as it combines mass audiences with smart data and targeting, to deliver the right piece of content at the right moment, fully automated via machine to machine. Magenta, the payboard platform of Deutsche Telekom, had the streaming rights for all the Euro matches, and as soon as one of the teams scored a goal, the highlight clip was streamed in near real time on our Public Video network to keep people up to date on their way back home, at train stations, or while they were shopping with a family in a mall, always reflecting the individual context of their location and the content.
It demonstrates digital out-of-home means showing more or less any possible piece of content at any time to any specific target groups, and fully automate, or simply broadcasting it to the whole nation. Let's do a quick recap. Our group performance and the strong operational gearing from revenue to EBIT and operating cash flow is predominantly driven by out-of-home, with the following future-proof operational levers. Number one, the most profitable product, digital out-of-home, is growing the fastest and will be above 50% of our total out-of-home business by the end of 2026. Second, the most profitable sales channel, national advertisers, is back on pre-COVID share, with sustainable sales KPIs and over proportionate growth of programmatic trading, which ultimately leads to more efficient sales processes. Three, the upfront investment in our digital infrastructure is completed since 2023.
CapEx, as shares of revenue, will constantly decrease while we still improve quality and performance of our network. four, our fill rate for digital out-of-home is still on a comparably low level, so massive potential for even more aggressive growth scenarios. And five, we've adjusted our classic out-of-home business in the last 18 months to the inflationary challenges of 2022 and 2023, and the tobacco advertising ban. We had nice growth in H1 and don't see that the business won't grow over the coming years, with more focus of our regional and local sales forces on the more traditional products. Also, something we've been working on in the last 18 months. So far on my remarks, and with that, over to Henning.
Thank you, Christian, and a very good morning, everybody. After an already strong start into the new fiscal year for the group, also the performance in the second quarter was strong across more or less all relevant KPIs. Reported sales growth in the second quarter came in at 12%. Therefore, organic growth accelerated from 8.9% in Q1 to now 11.5%. More than compensating for some continuous headwinds at Asam, the main contributor to that strong trajectory was, again, our out-of-home core business, outperforming also our own initial expectations. The group achieved strong profitable growth, with EBITDA adjusted, improving by almost EUR 25 million or 19% to EUR 155 million. Exceptional items in the quarter were roughly EUR 3.5 million.
The increase compared to the prior year, mainly resulted from a reorganization cost in Statista of EUR 1.5 million. For the full year, we are currently expecting broadly stable exceptionals compared to the prior year. Reported EBITDA came in at EUR 151 million, up 18% compared to the prior year quarter. Depreciation and amortization for the quarter was slightly up, influenced by a successful extension of our contract for the subway system in Warsaw. With that, the reported EBIT for the quarter improved significantly by 38% to EUR 72 million. The financial result came in at around EUR -18 million, compared to EUR -15 million in Q2 2023. The development mainly reflects higher interest rates.
The Euribor at the beginning of last year was still below 2% and kept rising to more than 3.8% until September 2023. Based on that, we shall still see rising interest costs in the coming months, but with reduced dynamics and eventually an improvement going forward, depending on ECB rate action. Sequentially, compared to the first quarter, the financial result was broadly stable. With that, earnings before tax came in at EUR 54 million, compared to EUR 37 million in the previous year's quarter. The tax rate for the quarter was around 30%, and that's in line with the first quarter. Adjustments to be considered in the quarter were approximately EUR 5 million and related mainly to the exceptionals mentioned before, and PPA-related amortizations of around EUR 3 million.
To remind us, the corresponding assets were recognized by way of purchase price allocation in the context of the major acquisitions of the past. The corresponding annual amortization level is declining, since more and more assets are fully written down in the meantime. After EUR 23 million in 2022 and EUR 19 million in 2023, in the current fiscal year, we expect about EUR 12 million. Considering the effects described above, net income adjusted came in at around EUR 42 million, so approximately EUR 11 million higher than in the prior year. I just now switch over to the cash flow. In the second quarter and also the first half, the improvement in EBITDA and lower cash out for working capital was contrasted by higher cash out for interest, as well as a decline in other. The quarterly working capital development reflects seasonal patterns.
For the full year, we expect still a moderate build-up in working capital. The increase in the position other mainly reflects a higher utilization of provisions compared to the last year, and a higher adjusted equity income included in the EBITDA that has not yet become cash effective, and as such, is corrected via the position others. All in all, and based on a strong Q2 development, that leads to an operating cash flow of now EUR 163 million for the first half. Cash out for the investments was down by EUR 10 million for the quarter, and now EUR 22 million for the first half. For the full year, we now expect CapEx below the prior year. Lease liability repayments were down on the quarter, but can always shift a little bit among the individual quarters.
For the full year, we continue to expect only a slight increase. With a strong Q2, the free cash flow adjusted, so the true underlying cash flow of the business, if you will, after lease liability repayments, amounted to EUR 22 million for the first half. This represents a considerable improvement of EUR 37 million against last year's first six months, where free cash flow still was negative. As already discussed during the year, we reiterate our expectation of significantly improved free cash flow generation for 2024. Let me come to the net debt development.
In the sequential view, from the end of the first to the end of the second quarter, net debt was up by EUR 61 million, including the adjusted free cash flow for the second quarter of EUR +46 million, and our dividend payment of EUR -107 million to Ströer shareholders and minorities. With that, our leverage ratio remained broadly stable compared to both Q2 last year and Q1 this year. And this, even though the dividend this year was already distributed in Q2, while last year it was only paid in the third quarter. So adjusted for the timing of dividends, the underlying leverage ratio has improved to around two times. In June, we successfully placed our note loan of EUR 268 million in tranches of three and five years with fixed and variable rates.
The corresponding funds shall be used to refinance a note loan of around EUR 110 million maturing in Q4, as well as to reduce the current utilization of our revolving credit facilities. With that, and with our strong improving leverage ratio, our financial flexibility remains strong. Let me now discuss the performance of the individual operating segments, starting with our core segment, out-of-home media. The teams in our core business, out-of-home media, delivered a remarkable performance, even ahead of our own expectations, and somewhat supported by good trading around the UEFA Euro here in Germany. During the championships, we had more than 2.5 million visitors attending the 51 matches, plus some 6 million fans joining the different fan zones in the large cities, plus many more other visitors. Organic growth for the quarter came in at 22%.
In early May, we expected it to be between 15% and 17%, plus some upside risk from trading around the UEFA Euro Cup. So I would say that alone might give you a sufficient idea what the underlying trend was against the moderate base of prior years Q2. The effect from the Euro materialized quite strongly in the trading performance of our classical out-of-home products that turned in at 10.21% growth. Needless to say, that this growth rate should not be seen as an indicator for the remainder of the year. In digital out-of-home, sales were up by almost 29%, and that's quite aligned with the already strong development of the first quarter. Again, within digital, our programmatic Public Video was a major contributor to that growth. Our regional local business, as well as our business with large national accounts, delivered an accelerating performance.
Among the top performers by industry, we had FMCG, telcos, and home and garden, while somewhat lagging were tourism, transport, and betting. EBITDA adjusted for the quarter increased from EUR 91 million to EUR 117 million, supported by moderating cost inflation and a better utilization as well of our classic infrastructure, the EBITDA margin improved by 300 basis points. Based on these strong results, we are now also expecting improving margin for the full fiscal year. In digital and dialogue, revenue in the second quarter increased by 12%. Within digital, sales growth was again driven by programmatic demand, while our content business remained broadly stable in a normalizing market context. Growth in our dialogue activities was 13% and still benefited from the acquisition of some call center locations last year.
Organic sales growth sequentially accelerated and was around 6% in Q2, after an increase of 3% in Q1. Altogether, the segment delivered an adjusted EBITDA of EUR 37 million, up from EUR 31 million last year. This improvement mainly comes from the dialogue business. Please bear in mind that earnings in digital are still affected by a technical effect from the loss of the Bauer contract that I mentioned in the last call. The effect on adjusted EBITDA from this for the second half will be around -EUR 5 million. There is and will be no effect on sales, EBIT, and net cash flow due to the compensation of business volume through newly acquired business mandates. Taking all this into account, we still expect a broadly stable adjusted EBITDA and improving cash flow for the segment in the full fiscal year.
Moving over to our data as a service and e-commerce segment with Statista and AZAM. In total, revenue growth was 3% in the second quarter, while Statista delivered the expected acceleration in sales growth from 4% in Q1 to now 7%, AZAM's business development was still impaired by reduced trading and wholesale distribution. Wholesale distribution last year delivered a very strong performance throughout the year, essentially from wholesalers catering for Chinese and consumer demand, and here, in particular, for products outside the classical beauty and care assortment of AZAM. Our visibility on that channel remains low, also for the second half of this year. On the other hand, sales in AZAM's core retail and online activities continue to deliver good growth.
For Statista, our expectations are unchanged, as we are anticipating a further clear improvement in the growth trend in the second half of this year, based on the measures of the new leadership team. As a consequence of the impaired performance at AZAM regarding China and increased marketing intensity, EBITDA adjusted for the segment was down from EUR 15 million to EUR 9 million. With that, let me hand you back over to Christian for the outlook and closing remarks.
Before ending the presentation, let me just have some comments on the outlook for Q3 and the rest of the year, as well as our financial calendar. For the third quarter, 2024, we expect organic revenue for out-of-home up by around 10%, whereas classic and services should grow low single digits, and digital out-of-home revenues are expected to be up by more than 20% again. For digital and dialogue, we expect growth to be in the mid-single-digit percentage range. Statista's revenue growth back to double-digit growth and further accelerated quarter-over-quarter. ASAM's stock business is expected to show continued single-digit growth. However, due to the China developments, ASAM in total down high single-digit in Q3. For the full year 2024, out-of-home should exceed the initial expectations, as published in our full year guidance, by roughly EUR 40 million on a group level.
This will be offset by lower ASAM sales in non-core medical wholesale product in China. We therefore see our annual guidance unchanged. Organic revenue growth noticeably higher than 2023, which was +7.5%, and substantial operational leverage based on an EBITDA margin around prior year level and IFRS effects roughly stable. Therefore, EBIT adjusted with double digit, sorry, double the growth rate of EBIT adjusted and free cash flow adjusted significantly above the growth rate of EBIT. I think, for, structure of the P&L that you've already seen in the H1 results. Let me now close the presentation with a short look into our financial calendar for 2024, 2025. Our next agenda topic will be the publication of our Q3 report on November thirteenth.
On the same date, right after the quarterly call, we will host our virtual Capital Markets Day. In this capital markets day, we will give you another deep dive into the topic of digital out-of-home and above all, the mechanics and dynamics of results. Corresponding invitation will be circulated. We will then publish our annual report for the 2024 financial year in the course of March. This report will include the mandatory publications on CSRD sustainability reporting for the first time. As always, updates, reports, and roadshow presentations can be found on our IR website. Thank you, everyone, and we are now happy to take your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands to ask a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Christopher Johnen, HSBC. Please go ahead.
Yes, good morning, all. Thanks for taking my questions. First on Statista. The second quarter was not below the 8%-10% guidance that you gave last quarter. Is there any sort of color on, you know, what happened during the quarter? Anything that's interesting? And then, on the guidance that you've given, the high teens, just looking at how the development and the acceleration of growth has been, is that also something that you'd be comfortable with, beyond Q3, i.e., also going into Q4? And then, second question on ASAM. I understand that this horse cream wholesale sort of one-off is difficult to forecast.
Just to ensure, I would assume that, you know, in the ongoing sales process, you know, whoever does the diligence will probably discount that anyway. So I'm just curious, you know, do you see that as a bit of an obstacle to the ongoing sales process, that the revenue has decelerated a little bit at ASAM? Or, you know, what's your view here? Thank you.
Hi, Christopher. Thanks for your question. Well, on Statista, I think, we are happy with the trend and the dynamics, because it's going in the right direction. Just as a recap, I think 2023 was the first year where you could see that historic outstanding growth had seen for the first time a little bit of limitations, but that was mainly for two reasons. I think the first one was that the company had grown to a level where a couple of structural changes were necessary. Yeah, I think we were. We got over 1,000 people, and then sooner or later, you need to change a couple of things. And secondly, the founders had after 17 years, where you could see that at the end of the period, I think, they were also ready and prepared to leave.
I think we had the management change. We found the right person. So, in that phase, we've changed a lot of things to prepare the company for the next three to five years. And in general, we are very happy with the decisions we've made and our new CEO, Mark Berg, and also partly a new leadership team and many things they've changed. And we see that from Q1 to Q2 to Q3, and based on what we see now, also Q4, we see constantly increasing revenue numbers. We see underlying profitability structures improving, and think that from 2025 onwards, the company will be back on historic growth track. The transition process is in line, and I think any kind of volatility on a quarterly basis is just part of the process.
Also, to be honest, it takes a little bit longer than we thought, but I think that's not driven by the actual performance, especially of the team. I think it's more a little bit our impatience and expecting that things also on a larger scale of a company, happen quicker than they realistically can happen. But in general, I think we're very happy with the development there, and I think plus, minus a couple of percentage points on a quarterly level is nothing that is really crucial for the mid and long-term perspective of Statista. I think the Asam case is a little bit different, but Henning-
Yeah.
Maybe you want to?
Well, I guess to be very clear, we believe that probably 90% of the variation Asam is to be found in its core business. And I think the good thing is that we're continuing to grow nicely out of the retail channel and also the retail channel. China was a great success last year, and I think it was always clear that the visibility on that channel is kind of lower. And I think we never really expected to get a proper valuation or the same multiple on that part of the business. So I think the bottom line is that should not, you know, have any repercussion on the disposal of Asam.
However, you know, it's kind of hard, you know, facing these prior year comes from China, and as you've implied in the call, that will also be sort of tough in the second half.
But just when you, you know, think of when you're in some kind of that such a process, I think if you see that development in China last year, you feel like, okay, it pushes the P&L nicely, but you almost know that whatever the numbers show, you won't get a reasonable price. 'Cause everyone knows how China business works, and the volatility is high, and whatever you do, it's almost like the higher you perform, the bigger the discount, 'cause no one knows what the underlying performance is. So I think at least on overproportionate expectations, I think that risk is gone. And I think the... As Henning said, the true value and the highest value for any buyer is in the underlying DOOH business.
Which has, just as a recap, we bought the business six - seven years ago with EUR 30-something revenues. That business has, like, more than quintupled. It was predominantly TV sales. We've diversified it into e-commerce on the online back shop into retail. In that time, we've established that strong key product Magic Finish. So we are happy overall, and I think that China business today is probably normal. What happened last year was the abnormal development. So I think in the context of our group, it's nothing that is, I would say, of fundamental importance.
Understood. Very clear. Thanks a lot.
Thanks.
The next question comes from the line of Annick Maas from Bernstein. Please go ahead.
Morning. So I have also three questions. My first one is: so you are in the process still of selling Asam, what does that actually mean, being in the process? Does that mean we sell it next month, we sell it in six months, or we sell it in twelve months? The second one is on out-of-home. So your growth expectations are slightly lower than what we've seen so far. Can you tell us how much maybe in Q2 was due to the football and therefore, in Q3 is not helping where the football is not helping anymore, or is there consumer pressure going on, or what is explaining the slightly slower growth in out-of-home? And then the last one, you've shown that you become more digital, and therefore, also your customers are becoming more national.
Can you just give us a bit of an indication of, what that means for you guys's forecasting? Thank you.
Hi, Annick. Thanks for your questions. I think on Asam, we are, as we said, willing and... What does process mean or being in the process of selling something? I think in our case, it means we are willing to sell, and we are prepared to sell. And we've done the basic work that is necessary internally to prepare for that, so that any further vendor DD work could be completed within few weeks. Yeah, but what we currently do is monitor the market, listen to people that are generally interested in the asset. But being in the process doesn't mean that we are actually really in a final phase.
I think before we go into that, we need to be sure that the market environment is right to receive reasonable, well-priced offers, and that the asset is performing well. So I think the core business is performing well. The China part is a volatility that we've anyway seen, but the M&A market, and also, I think the focus of potential strategic investors is not where it should be at the moment. So we monitor that, we are ready to go, but at the moment, the market is still a bit tricky. And even if it's non-core, I think we've invested so much time and a lot of work, and I think we've clearly upgraded the value of that business. We just don't wanna do anything in anything but perfect environment and timing.
I think that means in the process, but it doesn't mean that we are in the final stage of sending out material, being at a bidding process or anything like that.
On your question, Annick, what the underlying performance of out-of-home in the second quarter ex World Cup was, I tried to make a reference to that in my comments in the speech. You know that, on the occasion of our Q1 results, we forecasted, you know, 15%-70% organic growth for out-of-home, plus some upside risk. Now, we turned in more than 20%. I think that kind of difference might give you an idea what the UEFA Cup impact might have been for the quarter. And then in comparison to the expected 10% organic growth in the third quarter, I think you should also need to look at a two-year comparison. If you look like at the organic growth rates of a two-year timeframe-...
You would actually not see much of a slowdown looking at the 10% organic growth now. This is, I think, the proper way to look at it.
Your third question, you know, being, again, a little bit more focused on national advertisers and having a growing digital out-of-home business, what's the impact on forecasting and in parts, also visibility? I think in general, national advertisers plan, I would say, in three-six months cycles, but optimize a lot of things on a monthly basis, while regional and local advertisers have very concrete annual plans. So the higher the share of national advertisers, yeah, the shorter the general planning cycles of your customers, and it's the same with digital and versus analog. I think the average lead time or booking versus start of the campaign for digital is like four-six weeks. For classic, it's rather two-three months, and that means, of course, that we have a little bit less visibility at the moment.
At the same time, what we see is the other way around. We can still make more and more money towards the end of the quarter. Why? Because you can do digital out-of-home with national advertisers also in the last week of a quarter. Even on the last day, you're able to generate significant revenues. And I think that's where we're, in general, on the way to optimize a little bit our predictions and our forecasting tools, that we need to reflect that in a way. Because, yes, of course you have less visibility, but there is some kind of pattern in which clients book. And today, in the mid of Q3, we have probably 5-10 percentage points less in our order book, in relative terms, versus what we expect to be at the end of the quarter versus 2019. Why?
Because digital out-of-home has almost doubled in that period of time. If I even compare it with three or two years or three years ago, when the share of regional business was 10 points higher, it just means we had more of the ultimate revenues already in our books. That's why today we have, in relative terms, more to go or more to come, but the stuff that is to come is more digital and more national, and that's where we have the most traction. And that's why I would say I prefer a business growing in the teens with a little bit less visibility, versus a business growing 6%-8% and a little bit better predictability. That's why maybe our quarterly forecast used to be, I don't know, plus minus 1 percentage point on precise two or three years ago.
Today, there might be a little bit more variation, and maybe at the moment we are a little bit more on the conservative side. Yeah. Both us as management team, as well as the guys that run the sales, 'cause they still say, "Oh, there's so much to come," but they underestimate the general momentum of digital and the shift that we see in the national ad market. So I would say yes, a little bit more volatility, but it's, I would say it's a luxury problem, and rather has upside potential than a real challenge for our business.
Great. Thank you very much.
The next question comes from the line of Julien Roch, Barclays. Please go ahead.
Yes, good morning, everybody. The first question is on the full-year guidance. So out-of-home, EUR 40 million higher than initial full-year guidance, but ASAM lower. I believe, Christian, you said that ASAM would actually be about EUR 40 million lower. So, am I correct in saying that there's actually no change versus initial guidance and consensus is fine? That's my first question. The second on CapEx, you said bulk of digitalization behind us. So can you give us a full year 2024 CapEx guidance in euros, EUR 120, EUR 125, and then from 2025 onwards as a percentage of revenue? And then lastly, how much of your digital out-of-home revenue was programmatic in the first half? Thank you.
Thanks, Julien. The first one is a very lovely question. It's simple to answer. Yes, you're right. I think we were referring back to what we originally said and what the underlying plan was. Yes, and it's like a EUR 40 million shift between out-of-home and ASAM. So yes, consensus at the moment in general is pretty much reasonable, I would say. CapEx-
Yeah, on CapEx, yeah, from today's perspective in our forecast, we expect that the CapEx in the second half will be slightly above the prior year. I mean, you heard also Christian talking about the thing in the large screen that we're about to install in Hamburg and other things. So I guess, the decline for the year will not fully come in at the minus EUR 20 million that you see right now, probably for the year, I would calculate, it's like something like minus EUR 10 million. So which implies an up to EUR 10 million higher CapEx in the second half.
And programmatic, first six months is somewhere around 55% programmatic. So I think what we see at the moment is that is probably also driven by the UEFA Euro. We had strong classic bookings, but they were also, in some cases, combined with traditional loop-based digital out-of-home. But in general, the underlying momentum on programmatic is more or less unchanged. I think it's fair to say that that's kind of what we had in the first six months. 99%, would say two-thirds of that growth were clearly coming from national programmatic demand.
Sorry, did you say 55 or 65?
Fifty-five.
Sorry, the line cut again, sorry.
55, 5, 5.
Okay. And then, Henning, on the CapEx, thank you for the guidance on 2024. From 2025 onwards, as a percentage of revenue, now that you have lower capital intensity in out-of-home.
Yeah, I think that's what was coming out of what Christian explained to us. You know, when talking about that, like, the large investments to some extent are behind us, when we are clearly expecting a lower CapEx-to-sales ratio going forward for out-of-home. What that means for absolute CapEx, it's probably hard to tell at that moment, but I would not expect in the model right now, a big increase. I would rather model it sort of on a, on a stable level compared to 2024 for 2025.
Okay, thank you.
The next question comes from the line of Marcus Diebel, JPM. Please go ahead.
Yeah. Hi, everyone. Very strong cash generation, no, no doubt. How does management or the board actually, at this point, think about cash distribution? I mean, when we just look at the model, we heard the CapEx guidance, the question will increasingly come up. Yeah, so what is the thought process here? And then secondly, maybe for Henning, just on the net debt number, I didn't have time to look at the numbers in detail, but maybe if you could help me to understand the bridge year-on-year in net debt. You mentioned obviously the dividend payments, but if we go from EUR 750 net debt last year to EUR 840 this year, if you can just give me the two, three main items of this year, then...
Obviously, one is cash, one is the dividend, but is that basically it?
Okay. Hi, Marcus. Thanks for your questions. Maybe on the first one, capital allocation, I think the general strategy for the moment doesn't change. I think we are happy that the current strong momentum pushes down our leverage. Yeah, so probably year-end will be around, but probably below 2.0 leverage, so rather 1.9 or something like that. So I think that's a really robust number. Nevertheless, I mean, interest rates are different than three or four years ago, but I think in general, the company here is well settled. Looking forward, I think for the moment, we see that in relative terms, going forward, we need less cash. In absolute terms, the same or maybe a little bit more, but that's minor.
So yes, the money that we make will be distributed in dividends, and I think our current policy is like 50%-75%. When you look at the average, what we've done in the last three-four years, it was always rather at the upper end of that corridor. So I think that would be my starting point for the moment. Do I think that anything crazy happens there? I don't think so, but I think final adjustments and optimization of that policy is probably realistic once we have our full year numbers. Yeah, publish our annual report and then propose something to the AGM regarding dividends. But we don't see bigger M&A topics. Yeah, so we focus on organic growth.
We rather see opportunistic disposals in the right moment of time, where we also said historically, whatever money we generate beyond anything we need to keep on our balance sheet, we would pay out special dividends. So overall, I think leverage goes down, CapEx goes down by means of share of profits and revenues, so more money that is flexible and ready for growing dividends. But I think details is something we rather would discuss at the beginning of next year.
Marcus, on the-
So, basically keeping the payout ratio, which means in more absolute terms, clearly, but then the rest goes into debt for now, at least.
Yeah, in case that cash generation and net adjusted income is the same number, my feeling is, at the moment, it is roughly the same number or could be even a little bit more cash, then you're right. I think we had years when cash was below net adjusted income. I think that was one aspect. If you reference your dividend back to adjusted net income, and if, for instance, a company where you only have 51%, like ASAM, generates a lot of cash, where you ultimately only get 50%, then I think cash versus NAI is a bit misleading. My feeling is, at the moment, those numbers are very close.
So then you're right, that if we don't change anything and would go to the upper end of the corridor, there would be a little bit of cash left to reduce debt. You're right.
Marcus, on your question, net debt year-over-year, and you're right, there's significant decline. I mean, very simplistically, two things. That the increase in net debt includes two dividend payments. As I said in my speech, last year's dividend was paid only in the third quarter, this year in the second. So we have, like, EUR 200 million or more dividend payments in that development of net debt, minus the free cash flow generated over the period between those quarters, which is maybe around about EUR 100 million. So very simplistically, EUR 200 million dividends, EUR 100 million free cash flow gets the increase of around about EUR 100 million. I hope that explains it.
Yeah, yeah. No. Okay, just wanted to see the direction. I didn't have to look at the numbers and details given, given the results, obviously.
All right.
But that's just the concept that I get it. Okay.
Yeah.
But maybe as a whole, I think that's what we tried to transport in the presentation. I think there's a lot of things that we were able to reorganize and fix in the last two years. Yeah. Our managed cost styles, reorganized classic business, work on the fill rate. At the same time, when the markets have recovered, and I think especially that inflationary challenge and the tobacco advertising ban, plus lower share of national advertisers, was something that I think the combined impact of that was operationally probably EUR 40 million-EUR 50 million. Yeah, and that cost challenge came within six or seven months, and I think we've leveled that out now and feel quite confident going forward.
This leveling out is also, Marcus, seen in the, in the leverage ratio, right? Despite the EUR 100 million more net debt, leverage ratio is more or less the same. That is clear indication of a strong underlying improvement of cash generation.
No, no, I understand. Obviously, more, more EBITDA. Oh, okay. No, makes sense. I understood.
As a reminder, to ask a question, please press star and one. The next question comes from the line of James Tate, Goldman Sachs. Please go ahead.
Hi. Thank you. Good morning, it's James Tate from Goldman Sachs. I've also got two questions, please. I think firstly, just to check, you reiterated the full year guidance at the group level, including EBITDA margins, to be around the same level as in 2023. But given the change in mix with the stronger out-of-home offsetting weaker sales in ASAM, should we not expect to see some margin benefit, given the different margin profiles of these businesses? And then just secondly, for Statista, could you give some more color on the impact from your GenAI product launches here? Are these really the key drivers of new sales and customer trend retention, or is it the management changes that you talked about earlier? Thank you.
James, on the question of, on the notion that is there a chance that the margin mix improves with declining sales in ASAM and improving out-of-home expectations? The answer is no, because actually the business in China contains pretty strong margins, pretty strong gross profit margins. That also explains, to some extent, the only decline that we had in the third segment in the second quarter. So unfortunately, sales go in and out, and our expectation at more or less the same margin level. So net, net, there's no change on what we expect for the group margin.
On Statista, I think the momentum that we see is clearly driven by changing management and operational focus in a couple of areas. I think one of those is clearly what we do around AI, and one aspect of the change program that is also paying off slowly is the AI-supported search function within Statista. So you might have an account, and you go on a website and type in the something in the search. Yeah, you'll get an AI-supported management abstract and summary first, that answers the key question that you have on the basis of all the underlying data, and then shows on top the various links to the detailed statistics. So that kind of management summary upfront is something that is AI-driven. That is something we didn't have before, and of course, substantially improves the usability of the tool.
'Cause only if you're an expert, yeah, you know how to handle it. You answer... You have a question, you get a lot of statistics, you work with the statistics. So I think that's perfect for specialists and BI professionals. If you're more in general management and expect a quick answer and wanna be sure that there is more underlying substance than if you Google it, or especially if you take business decisions on it or talk to more senior persons, then that AI-supported search function of Statista is quite some progress that we've seen. But I would say it's one aspect of a couple of things we're working on. Yes, it also has impact, but it's not the ultimate AI answer that is changing things at the moment. Yeah, it's just one feature.
There are no more questions at this time.
Perfect. Then, well, also we have some, many, many thanks that you had time for us, and participated. Thanks for your questions. Enjoy the rest of a hopefully nice summer, and, we speak soon. Take care and bye-bye.
Take care. Bye.
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