Havas in H1 Stormy Waters, Axes Diversified Agencies Division

03 October 2001

Paris-headquartered Havas Advertising on Tuesday unveiled a first half net loss of $6.5 million (E7m) and predicted that 2002 would see little improvement. But for unspecified one-off charges pre-tax profits would have been $65 million.

Prophesied chairman-ceo Alain de Pouzilhac: “We don't expect a rebound in 2002. We believe it will come in 2003.” The news caused the usual stock market knee-jerk, Havas shares declining on Nasdaq by nearly 12% to $5 within minutes of the announcement.

De Pouzilhac also revealed stringent cost-cutting measures, chief among which is the axing of Havas’ Diversified Agencies Group – a move implemented in May and due for completion this month.

DAG comprises over seventy discrete agencies and marketing services operations, between them accounting for 27% of Havas revenues. Some eighty percent of the group’s constituents will be absorbed into Havas’ three remaining divisions: Euro RSCG Worldwide, New York; Boston-based Arnold Worldwide Partners; and the Media Planning Group in Barcelona.

The fate of the largest DAG constituent, UK-headquartered Brann Worldwide, is unknown. In 2000 it contributed gross income of $254.8m to Havas’ coffers.

Gloom notwithstanding, Havas insists it is committed to the growth of its Media Planning Group – with which Tempus Group would have combined had Havas succeeded in its takeover bid. Despite this setback, de Pouzilhac believes that MPG will become one of the top five specialist global media networks by the end of 2003,

Says MPG ceo Fernando Rodes: “Tempus was a nice fit, but we can get much more value for less money. We'll continue our geographic expansion. There are potential opportunities in markets where we are not yet open, like Italy and Germany.”

News source: AdAge.com; Wall Street Journal