BOSTON Despite achieving 4 percent organic revenue growth in the third quarter to $400 million, compared to the same period last year, Havas today issued a warning for the fourth quarter, projecting a steep decline as the impact of major account losses, such as Volkswagen, kicks in.
In a statement, the Paris-based holding company said, "Following organic growth of 2.8 percent during the first nine months of the year (to $1.2 billion), a strong slowdown is estimated for the last quarter, due notably to the high basis of comparison with fourth quarter 2004 (when organic growth was 4.6 percent), and the impact of the year's account losses." (Organic growth factors out currency fluctuations.)
Havas said it plans to make a strategic reorganization by year's end. When asked about asset changes during a conference call with analysts today, Havas CEO Philippe Wahl said, "Our aim is to accelerate growth in all these divisions (Arnold, Euro RSCG and Media Planning Group)," but he did not elaborate.
After refusing to be pinned down on several questions about how much of a slowdown to expect in the fourth quarter, company CFO Jacques Hérail said he projects organic growth to be "break-even or slightly negative."
In terms of margins, Hérail said only that the analyst consensus of approximately 12.5 percent is "too high."
Along with VW's $400 million account, which is shifting from Arnold in Boston to MDC Partners' Crispin Porter + Bogusky in Miami, other key losses include assignments from Argos, Peugeot and Nestlé, as well as the $300 million global Intel business, which moved to Interpublic Group's McCann Worldgroup in March.
Havas' organic growth for the quarter was 24 percent in Latin America (excluding Brazil) and 7 percent in North America, but 2.3 percent in Europe and -8.6 percent in the Asia-Pacific region, where the loss of Intel hit hard.
Separately, Havas chairman Vincent Bolloré has in recent months amassed a nearly 25 percent stake in London-based Aegis Group. The investment is managed separately from Havas. Should his stake reach 30 percent, he would have to make a bid on Aegis, according to U.K. takeover law.