Havas's Profit Climbed 40% in 1st Half

French Firm Benefits From New Accounts; Aegis Revenue Is Solid

French media company Havas SA Thursday posted a 40% rise in first-half net profit, boosted by winning new accounts and the strong performance of recent acquisitions. Separately, Aegis Group PLC, one of the world's biggest ad buyers, reported relatively strong growth in revenue but sounded a note of caution about the second half.

Havas's net profit rose to €49 million ($72.1 million) from €35 million a year earlier. Havas said the euro's rise against the dollar and pound hurt earnings by €46 million compared with the first half of 2007. Last month the company already reported that organic revenue growth, a closely watched figure that strips out the impact of acquisitions and disposals, was 8% in the first half, while revenue was 3.6% higher at €755 million compared with €729 million last year.

At that time, Chief Executive Fernando Rodes Vila said the company was preparing "for a more fragile economic times ahead," but said he was "comfortable about our ability to react." The company achieved net new business valued at €1.13 billion in the first six months of the year.

Revenue was up because of "strong business growth in key markets reflecting new account wins and increased market share," it said. Among the accounts won by Havas in the first half were Pernod Ricard SA, Pfizer Inc., Western Union Co. and Coca-Cola Co.

Earlier this year Havas bought U.K. media agency BLM, U.K. entertainment agency Cake, and San Francisco-based digital agency Kadium.

French industrialist Vincent Bolloré is the controlling stockholder of Havas, as well as a 30% shareholder in Aegis. Earlier Thursday Aegis reported better-than-expected first-half results, but the company saw its shares drop about 5% after it, too, gave a cautious outlook for the second half. Unlike at Havas, the strong euro helped Aegis's earnings, pushing sales up substantially, contributing £35.5 million ($65.1 million) to revenue of £607.6 million, up from £499 million the year before.

Aegis, which owns media-buying agency Carat and digital-planning group Isobar, said organic revenue, which strips out acquisitions and currency effects, grew 8.2% in the six months to June 30, ahead of the wider marketing-services sector. Net profit rose 17% to £30 million.

"We anticipate a lower rate of market growth than in the first half and are therefore taking some early steps to tighten our cost base in a number of markets," Chief Executive Robert Lerwell said. Last Friday, media peer WPP Group PLC sounded caution for 2009 amid the economic downturn, and Wednesday Aegis's Carat agency cut its global advertising forecasts for 2008 and 2009 amid the continued economic downturn.

Havas shares have fallen over 23% this year over fears of the impact the economic slowdown will have on the global advertising market. Shares Thursday closed up 2.7% at €2.63 in a higher overall Paris market, before the results were released.

By: Erica Herrero-Martinez & Kathy Sandler
Wall Street Journal; August 29, 2008