HAVAS ANNOUNCES REORGANIZATION

To Include New 'Advertising-Entertainment Offering'

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NEW YORK (AdAge.com) -- While announcing third-quarter results, which included organic growth up nearly 4% compared with the year-ago period, Havas management said a reorganization is coming before the end of the year.

In a conference call with investors, CEO Philippe Wahl, a former banker and statesman who joined Havas in July, offered only limited details on the strategic reorganization it plans to unveil before Christmas. He said only that the "reorientation is to accelerate growth in media buying and advertising." Among other things, it "will include a new kind of advertising-entertainment offering.”

'Accelerate' growth
The overall goal, he said, is to “accelerate” the company’s growth, but acknowledged that “won’t necessarily happen in a linear manner.”

Havas in 2003 began a strategic reorganization that resulted in a 13% reduction in staff, office closings and sales of some units by mid-2004. In September 2004, then chairman-CEO Alain de Pouzilhac said the company's recovery was "confirmed" as a result of that reorganization, but management continued its focus on improving profitability, reducing costs and achieving a media joint venture.

Revenue for the parent of agency networks Euro RSCG Worldwide and Arnold Worldwide and media-buying agency MPG during the third quarter was essentially unchanged at 341 million euros, compared with 338 million euros for the prior period. (In dollars, however, there appears to be decrease -- $401 million vs. $433 million last year -- due to currency fluctuation.)

Organic growth for the quarter jumped 3.9% compared with 3% for last year’s third quarter, a result of strong performance of traditional marketing activities and an improvement in marketing services.

Fourth-quarter warning
Management, however, warned of a slowdown in organic growth rates for the fourth quarter, due to tough comparisons with the same period last year and the loss of major accounts, notbaly Volkswagen of North America (from Arnold) and Argos (from Euro RSCG, London). In addition, the reorganization plan may include restructuring costs that could have an impact on Havas’ full-year results, said Jacques Herail, Havas' chief financial officer.

One analyst asked Mr. Wahl about the status of Havas’ current media joint ventures and whether the company intends to forge similar links with other agencies. Mr. Wahl said 2MV, a unit formed in April between MPG and WPP Group’s Group M to compete for a media review for Peugeot, “has achieved its goal,” winning parts of the European automaker's business.

Mr. Wahl also said that a joint-venture with WPP in Asia, called Motivator, continues. He did not address the market speculation that Havas might in the near future forge an alliance with Aegis Group. Havas' chairman, French industrialist Vincent Bollore, now owns 24.99% of Aegis shares and in the past has expressed interest in developing an alliance between Havas and Aegis.

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