Havas today posted a first half loss of â‚Ź58 million and issued details of a restructuring plan designed to revive fortunes at the ailing French advertising group.
Operating profit fell to â‚Ź68 million in the six months to the end of June from â‚Ź115 million a year earlier. This was below analysts’ expectations and Havas is being outperformed by the likes of WPP and Publicis.
Revenues fell by 18.8% to â‚Ź836 million and the loss this period compares with net income of â‚Ź15 million in the first half of 2002. Havas said that this was the result of unfavourable exchange rates and the weak European economy but the company has taken steps to address the downturn by announcing a major reorganisation (see Havas Takes Steps To Reverse Sales Decline).
Seventeen companies will be integrated into the Euro RSCG Worldwide network which will be strengthened as a global brand while another subsidiary Arnold Worldwide Partners will focus its creative efforts in local markets.
MPG, the media-buying unit, is to be boosted by the addition of new research companies and will look to increase its global stature by joining forces with direct marketing agency EHS Brann for data management.
The shake-up, which involves 1600 redundancies, will cost Havas â‚Ź180 million this year. However, the company estimates that annual savings will come to â‚Ź90 million with a positive cash impact of about â‚Ź110 million from 2004.
Alain de Pouzilhac, chairman and CEO, commented: “Our objective is to organise Havas so as to be able to respond in the best way possible to the new and evolving needs of our clients worldwide, to prepare our group for the significant changes anticipated within the media environment in the future and to relaunch our growth and profits. The interim figures have helped give us the courage to go right through with the logic of our reorganisation.
