'Exceptional, not structural': Havas upbeat despite 2003 loss

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Restructuring costs caused Havas to post a large loss for 2003, but the company's management said the pain is already passing and the company could show growth in the first quarter.

Havas-parent of Euro RSCG Worldwide, Arnold Worldwide Partners and Media Planning Group-posted a net loss of $496.95 million in 2003, compared to net income of $24.59 million in 2002. Revenue totaled $2.1 billion, down 17.3%, or 5.7% on an organic basis, after factoring out currency fluctuations, acquisitions and dispositions.

The loss was mainly due to some exceptional items related to a restructuring plan begun last year, said Chief Financial Officer Jacques Herail. In a conference call with analysts, he noted the items include $216 million in costs due to staff reductions and the elimination of some real estate and another $64 million spent on a cash payment to convertible bondholders in exchange for not exercising their option to sell their holdings back to the company.


The results were "disappointing," said Chairman-CEO Alain de Pouzilhac. But he said the weakness is "exceptional, not structural." Havas is seeing results from the restructuring, which focused on strengthening the integrated capabilities of Euro RSCG and reducing the company's costs, he said. Havas has nearly completed the disposal or consolidation of 50 underperforming units targeted as part of the restructuring.

The changes should result in profits this year, as the U.S. recovery continues and Havas' key markets in the U.K., France and Continental Europe begin to show improvement, Mr. de Pouzilhac said.

The news gave a strong boost to Havas' embattled stock. Share prices rose 6.82% in the Paris Bourse after the announcement to close at 4.70 Euros, or $5.73. American depository receipt shares on the Nasdaq closed at $5.73 March 5, up 3.4%.

Fast Facts

Havas (HAVS)

2003 Revenue: $2.1 billion, down 17.3%,

2003 Net Loss: $496.95 million, change n/a

Source: Company report. Percent change is vs. last year and not adjusted for currency.

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