Havas has blamed its Euro RSCG network for a slide in revenues and deteriorating operating margins.
The French-headquartered agency group posted 2003 revenues of €1.645 billion ($2.0bn; £1.1bn), a decline of 17.2% year-on-year. Operating income, meanwhile, slumped from €229m in 2002 to €136m.
As a result, operating margins slid from 11.5% to 8.3% last year, well below the margins achieved by rivals WPP Group (13%) and Publicis Groupe (14%).
Euro RSCG, said Havas, had been overoptimistic in its revenue forecasts, meaning the group's cost structure was too high when income turned out to be lower than expected.
Havas restructured late last year after a difficult first half [WAMN: 22-Sep-03], and the resulting costs contributed to a €226m exceptional charge. Consequently, the group registered a net loss of €389m in 2003, down from a €40m net profit in 2002.
However, the French firm focused on the positive, pointing to ten major account wins last year and a new business record it claims is better than at WPP. It also promised an improved performance in 2004, adding: "Havas should, whatever the environment, reap the benefits of its new organization and return to a dynamic of growth while boosting its profitability significantly."
Data sourced from: Havas; additional content by WARC staff