Havas annual revenue drops 1% but 'cost control' lifts profit

Vivendi was 'satisfied' as decline was better than that of Publicis and Dentsu Aegis.

Starbucks: handed media business to Havas Media in 2019
Starbucks: handed media business to Havas Media in 2019

Havas reported a 1% drop in organic revenue to €2.4 billion last year, but profits rose in a sign of the "robustness of its business model despite a challenging advertising environment", parent company Vivendi said.

Vivendi, which posted its results last week, reported that Havas' earnings before interest, tax and amortisation rose 0.5% on an organic basis to €225 million.

The results highlighted the strength of the media arm, "thanks to the new meaningful media approach launched at the beginning of 2019".

This model aims to create stronger or "meaningful" relationships with audiences through the media that means the most to those consumers.

As a result, the company launched Mx (which stands for media experience) in July 2019 that considers the context and content that is best to reach a certain demographic.

The results also highlighted "strong performances" for the healthcare division and creative agencies BETC, Rosapark and Edge.

The report added that "the general network moved purposefully ahead with its transformation in order to adapt itself to evolving client needs".

Vivendi pointed out that Havas’ acquisitions in the second half of the year were "of strategic importance in terms of geographic expansion and strengthening its expertise". These were: Buzzman in France, Langoor and Shobiz in India, and Gate One in the UK.

Havas' 1% decline in organic revenue is better than French counterpart Publicis Groupe, which dropped 2.3%, and Dentsu Aegis Network, which was down 1.9%, but well behind Interpublic, which soared 3.3%, and Omnicom, which rose 2.8%.

WPP is the last of the big six agency groups to report next week.

Vivendi said on its earnings call that it was "satisfied" with Havas' performance, particularly compared with its "European peers".

"Strong cost control" and "very good cash generation" mean "we are confident for the future at Havas", the company added.

Vivendi has the potential to carry out large-scale mergers and acquisitions, after agreeing to sell a 10% stake in Universal Music Group for €3bn to Tencent.

However, Arnaud de Puyfontaine, chief executive of Vivendi, dismissed the idea that Havas might buy Publicis.

Vivendi has had "no discussion at all" with Publicis and it is "very, very happy" with its current strategy of smaller M&A deals, he said.

Source:
Campaign UK

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