BOSTON Havas on Thursday reported a 52 percent increase in first-half net income to approximately $42 million on a 6.5 percent dip in revenue to $870 million, compared to the first six months of 2004.
The profit increase had been expected, and was attributed to an overall reduction in operating expenses achieved by the December 2004 repurchase of bonds following a rights issue last October.
Havas' profit margin improved slightly during the period to 10.8 percent from 10.6 percent.
The company said its first-half margin would have been more than 11 percent (a 10 percent increase over 2004) if not for "other operating items," including expenses related to the June departure of chairman and CEO Alain de Pouzilhac.
Havas did not spell out the amount de Pouzilhac received, but underscored the acrimonious nature of his ouster by referring to its 10-year leader as "the group's previous CEO," rather than by name.
In a statement, Havas said, "The group's results need to be significantly improved by a combination of revenue growth, translating into increased market share, with a substantial rise in profitability."
The Paris-based holding company attributed the revenue decline "to changes in scope and exchange rate variations," noting that in organic growth terms (which exclude exchange-rate factors) revenue in the first half increased 2.2 percent.
The company said its net new business in the first half totaled about $620 million. AutoZone, ESPN Mobile, RadioShack and Sony Electronics were among the most significant additions.
On the flip side, several large assignments left, including Intel's $300 million global account and the media portion of Volkswagen of America's $400 million business.
On Tuesday, VW's creative chores, at Havas' Arnold in Boston for a decade, shifted without a review to MDC Partners' Crispin Porter + Bogusky in Miami [Adweek Online, Sept. 6].
In addition to Arnold, Havas owns Euro RSCG and Media Planning Group.
De Pouzilhac departed after a bruising battle over board representation with Havas investor and French corporate raider Vincent Bolloré. Bolloré and Philippe Wahl were respectively named Havas chairman and CEO in July.
Bolloré last month upped his stake in U.K. media concern Aegis Group to 6 percent, but both companies have dismissed a possible takeover attempt by Bolloré as speculation.
Bolloré Group (which operates independently of Havas) yesterday said it had sold its Delmas cargo ship fleet to CMA-CGM Group and would realize approximately $320 million in cash early next year from the deal [Adweek Online, Sept. 7]. Bolloré Group did not say what it would do with the money.