Havas Says Adjusted Revenue Rose Three Percent

BOSTON — Havas Advertising, the No.5 agency holding company, on Wednesday reported revenue of $1.4 billion for the first nine months of the year, based on the current rate of exchange.

Adjusted to account for acquisitions and currency fluctuations, that performance represents an improvement of about 3% compared with the same period a year ago.

Billings for the nine months were slightly more than $9 billion, also an increase of 3% compared with Jan.-Sept. 2000. Paris-based Havas, governed by French financial reporting regulations, did not disclose earnings at this time.

Havas said short-term growth in the fourth quarter and early-2002, given the volatility of world markets, will likely be “close to zero percent plus” and its EBIT margin between 10% and 12%.

Havas in October began dismantling its Diversified Agencies Group in order to save $120 million over the next two years. The 70 DAG agencies specialize mainly in direct marketing, public relations and interactive capabilities. Those shops will be absorbed by Havas’ other networks: Arnold, Euro RSCG and Media Planning.

“Fifty-five percent of DAG revenues will migrate to Euro RSCG, Arnold and Media Planning,” said Havas chairman and CEO Alain de Pouzilhac in a statement. “At the same time, Havas Advertising is going to develop certain specialized agencies in three dynamic and highly profitable sectors.”

Those sectors, representing 36% of DAG revenues, are public relations, marketing support services and human resources communications, de Pouzilhac said. The dispensation of the rest of DAG has yet to be determined, he said.

Details of that reorganization are expected later this week. Brann Worldwide, the Wilton, Conn., relationship marketing agency with nearly $1 billion in billings, is by far the largest component of DAG. Potential client conflicts and personnel issues have made it especialy difficult to shift the entire Brann operation into another network, sources said. Euro RSCG, New York, is seen as the unit’s most likely new home, though provisions to operate Brann autonomously or split up its assets have also been discussed, sources said.

Officials from Havas, Brann and Euro RSCG declined to comment on the realignment of agencies and sources said fine points (mainly shifting some accounts between shops) were still being worked out Wednesday morning.

Jean-Michel Carlo, who had been DAG’s chairman and CEO, resigned last week and said he is leaving Havas. The final realignment of the DAG shops is expected to be revealed before the end of the week