Reports Revenues of $1 Billion and Gains in New Business

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NEW YORK (AdAge.com) -- While executives for Havas said the French ad company showed improved results in the second quarter, helped by gains in new business and growth in marketing services revenue, they warned the advertising market remains weak and is expected to be down for the year.

In a conference call with analysts, Havas executives said 2002 first-half results are up against a relatively strong first half last year, when the European market had not followed the U.S. into a recessionary void. For the half, Havas reported revenue of $1.01 billion, a 3.4% drop from 2001 and a drop of 5.4% after factoring out the impact of currency and acquisitions.

Short-term picture
The short-term picture, said Havas Chairman-CEO Alain de Pouzilhac, remains low in visibility, as clients are still hesitating to spend and launch new products.

Advertising revenue

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in North America dropped 11.3% in the second quarter, a worse performance than in the first, when it was down 8.2%. Europe, Havas' largest region, was down 0.2% in the second quarter, an improvement over a drop of 4.7% in the first.

Havas has seen some stabilization in the U.S. market over the last few months, but not a return to significant growth, said Bob Schmetterer, chairman-CEO of the Euro RSCG Worldwide network. Mr. Schmetterer said the strong television buying market known as the upfront signaled that advertisers are now more confident in terms of making advance commitments to ad spending, but he warned that that confidence still depends heavily on the "psychology of the stock market" and corporate earnings.

"The recovery of the North American economy remains fragile in our view," Mr. de Pouzilhac said.

Havas' organic growth figures improved from a drop of 5.5% in the first quarter to a drop of 5.2% in the second as Havas posted $519.5 million in revenue. Full second-quarter and first-half figures including net income will be announced Sept. 20.

Results got a boost from $1.05 billion in net new business during the first half, level with the year-ago period, and from improvement in marketing services and media revenue, which was down 1.6% for the second quarter, while traditional advertising dropped 11%. Marketing services and media performance improved from a 4% drop in the first quarter, while traditional advertising worsened after a drop of 8.1%.

Some disciplines showed improvement in the second quarter, such as media and specialist communications, said Jacques Herail, the company's chief financial officer. By contrast, public relations and customer relationship management worsened in the second quarter.

WorldCom worries
One particular client, WorldCom, remain a concern to analysts, who wanted to know if its bankruptcy would cause of cut back on its ad spend.

WorldCom remains a key client, Mr. de Pouzilhac said. Havas' media staff have contacted media providers, who have shown a willingness to deal with WorldCom in favorable terms, without asking for an immediate resolution of amounts due at the time of the bankruptcy filing, he said.

"Advertising and marketing are critical to [WorldCom's] continued operation, so we look forward to continuing our partnership," he said.

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