Global marketing services group endures the worst organic revenue growth rate among its peers
Vincent Bollor�'s Havas has reported the lowest organic revenue growth rate among the global marketing services groups in the first half of 2011 at 5.6% as Europe, which accounts for over 50% of total revenues, saw revenues go into reverse between April and June.
Havas, the French advertising group in which Bollor� holds a 33% stake, reported total revenues up 5.6% year on year to ?765m (�677m) in the first six months.
While this is the worst organic revenue growth rate for the period among any of its peers ? which include WPP, Publicis and Omnicom ? the real cause for concern is Havas's second quarter performance.
In the first quarter Havas reported a rosy organic growth rate of 6.8% ? hailing the strength of its US operation and a return to year-on-year growth for the UK ? but in the second quarter growth fell back to 4.5%.
In the second quarter revenues across Havas's European operations as a whole went into reverse, down 0.9% year on year ? compared to 3.8% growth in the first quarter. Europe accounts for 53% of Havas's total revenues. The UK went from 2.4% growth in the first quarter to a 0.9% fall in the second quarter.
Havas's home market of France also reported a 0.9% fall in the second quarter, down from 4.9% growth in the first quarter.
Revenues across markets in the "rest of Europe" fell by a combined 0.7% year on year in the second quarter, again a significant reversal from 3.5% growth in the first three months of 2011.
However, North America, which accounts for 33% of total group revenues, remained in rude health. Year-on-year revenue growth of more than 7% in the first quarter improved in the second three months of the year to 9%.
The rest of the world ? which accounts for just 14% of total group revenues ? slipped slightly from 19.5% year-on-year growth in the first quarter to 18% in the second quarter.
Within this Asia Pacific and Africa saw growth in revenues shrink from 10% in the first quarter to 8.4% in the second quarter.
However, Latin America stayed solid at 24.6% year-on-year growth across the whole of the first six months of 2011.
"The softer performance in the first six months has been driven by losses in the UK of Dulux and EDF," said David Jones, chief executive of Havas. "Also worth factoring in and understanding is that our ad agency in the UK [Euro RSCG] did over 20% growth last year [making for a tough year-on-year comparison]."
Income from operations, a close approximation to profit before tax, rose 13% year on year in the six months to the end of June.
Jones added that a number of new business wins should put Havas in a "decent position" for the second six months of the year in the UK.
On a macro-level Jones said the economic uncertainty meant that marketing clients were becoming more concerned about the outlook. "I can't tell you they have cut spend but I can tell you they are not as optimistic as seven months ago," he added.
Jones also said Havas remains committed to making major acquisitions ? in March the company said it had a ?750m (�643m) war chest ? but that given valuations and the economic climate he wanted to make sure the funds are "spent wisely".
"[Acquisitions] absolutely remain our goal and objective," he said. "We want to spend our money wisely. We have looked at an analysed every significant target out there in the market. Lets be absolutely clear, the valuations on digital businesses are extraordinarily high."
Jones also said Havas was considering launching a share buyback programme. "It is something we will look at and consider," he said. "Our view is our share price is undervalued compared to what we think it should be. It is something we will look at."
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Source: http://www.guardian.co.uk/media/2011/aug/30/vincent-bollore-s-poor-growth
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