By The Wall Street Journal
French advertising and marketing group Havas SA on Monday posted a 19% drop in first-half net profit because of lower ad spending and didn't provide an outlook for the rest of the year. Organic revenue, a closely watched metric in the advertising industry that strips out currency effects, acquisitions and disposals, fell 9.8% in the second quarter.
[havas earnings]
Profit for the six months ended June 30 fell to €40 million ($57 million) from €49 million last year. Revenue fell 7.9% to €700 million.
Havas, whose clients include French utility Électricité de France and car maker PSA Peugeot-Citroën, said operating profit totaled €71 million, down from €82 million last year. In June, Chairman Vincent Bolloré said that he expected organic revenue to decline a maximum of 10% in 2009. Mr. Bolloré is the controlling shareholder in Havas and also owns nearly 30% in U.K.-based rival Aegis Group PLC.
The company, which has lost several large accounts this year, including French retailer Carrefour SA, said net new business totaled €813 million in the first half. Digital businesses, which include online advertising, posted organic growth of 5% and now account for 16.4% of group revenue.
The advertising industry has been hard hit by the global recession, as marketers cut back ad spending, causing advertising companies to lay off thousands of workers and trim costs as revenue shrinks.
Last week, rival WPP PLC cautioned that improving sentiment in the world economy isn't yet translating into rising orders for expensive advertising campaigns and U.K.-based rival Aegis cautioned that it doesn't expect an upturn in the advertising market in the second half. Still, some ad industry executives have indicated that the worst of the downturn was over.
