HAVAS' QUARTERLY, FIRST-HALF REVENUE DOWN

New CEO Refuses to Detail Direction of French Ad Company

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NEW YORK (AdAge.com) -- Less than one month after being named CEO of Havas, Philippe Wahl told investors and analysts today that “we have to reassess the strategy of the group” and refused to answer specific questions as to what direction the French advertising holding company is headed.
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Revenue down
Revenue for the second quarter was $451 million, a 5.5% drop compared with the year-earlier period. For 2005's first half, Havas’ revenue declined 6.4% to $854 million compared with the prior year.

Organic growth for the second quarter rose 3% compared to the second quarter 2004, and for the first half of 2005 increased 2.2%. Following the revenue and organic growth results announced today, Havas will report earnings and other financial details in September.

Havas is the parent of global network Euro RSCG Worldwide and media buying and planning firm MPG.

Revenues in North America, which is the largest geographic region in which Havas operates, were flat at $338 million with the year ago period.

Wins and losses
The impact of account wins including RadioShack in the U.S. were offset by the losses of Intel and Volkswagen. Latin America, excluding Brazil, delivered the best organic growth results, with a 19% increase in the first half compared with one year ago, while Asia Pacific, delivered the worst. Organic growth declined 6% in the first half vs. the prior year, primarily because of the loss of Intel.

Analysts today during a conference call announcing first-half 2005 revenue pressed Mr. Wahl for details about Havas' future. One asked whether Havas might make a bid for Aegis Group, parent of media buying and planning agency Carat, now rumored to be in play. Mr. Wahl refused to comment. A follow-up query pushed Mr. Wahl as to whether he’d “be prepared to make a move before Havas’ strategy is formally announced.” Mr. Wahl replied, “We have to be opportunistic, and work for the good of the company,” but offered no further details.

Boardroom battles
Mr. Wahl, 49, was appointed CEO July 12 following several months of boardroom battles between former chairman-CEO Alain de Pouzilhac and Vincent Bollore, Havas' single-largest shareholder, whose stake is just over 22%. After losing a fight to keep Mr. Bollore and several of his representatives from gaining seats on Havas board, Mr. de Pouzilhac resigned in June. Mr. Wahl, a former top executive at French bank Caisse Nationale des Caisses d'Epargne, was named CEO after an effort to pry away well-known French adman Jean-Marie Dru from Omnicom Group’s TBWA Worldwide failed. Mr. Bollore became chairman.

Euro RSCG
Asked whether the headquarters of Euro RSCG Worldwide, Havas’ largest unit -- which delivers approximately 70% of Havas' revenue -- will be relocated to Europe as a result of a major management change announced Aug. 1, Mr. Wahl said he doesn’t “see today any reason for such a move.”

As to whether management is sticking to its previously stated 15% margin target for 2006, Chief Financial Officer Jacques Herail declined to comment. The second-quarter numbers were reported under International Financial Reporting Standards, and because earlier forecast outlooks were not made under those standards, “we have to reassess,” said Mr. Herail.

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