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UPDATE 1-France's Havas says will not meet 2017 organic growth target
August 25, 2017 / 5:15 PM / a month ago

UPDATE 1-France's Havas says will not meet 2017 organic growth target

(Adds information from conference call)

Aug 25 (Reuters) - France’s Havas said on Friday it could not confirm its forecast of organic growth of 2-3 percent for 2017, as declining investment from advertisers, increasing margin pressure and a downturn in high-growth markets weighed on first-half revenue.

The world’s sixth largest advertising agency reported revenue of 1.11 billion euros ($1.32 billion), down 0.4 percent organically. First-half operating income declined 27 percent to 100 million euros.

“Havas’ financial performance in the first half of 2017 suffered a slowdown which affected the industry as a whole and led to revenue and profitability below our expectations,” Chief Executive Yannick Bollore said in a statement.

Advertising agencies have been hit as clients are coming increasingly under pressure to rein in spending on marketing.

On Wednesday, WPP Chief Executive Martin Sorrell said the growing influence of activist investors in the consumer goods sector was adding to pressure to cut spending and boost margins.

WPP cut its sales target for the second time in six months as a result of decreased spending by consumer goods companies.

Havas has not only seen spending decrease in the consumer goods sector, but also in the telecoms and automotive sectors, Yannick Bollore said during a call.

Havas hopes that growth and profitability will slightly improve in the second half of the year, Bollore said, adding that he remained confident in the company’s mid-term objectives.

Bollore singled out Brazil and Mexico, where the group has a large presence, alongside India and China as markets where an economic downturn had affected the company’s results.

VIVENDI DEAL TO CLOSE IN OCTOBER

Media giant Vivendi bought the Bollore group’s majority stake in Havas in July and will follow up with a full buyout offer.

The deal should close in early October, Yannick Bollore said during the call.

French tycoon Vincent Bollore, owner of the Bollore group and chairman and largest shareholder of Vivendi, is the father of Yannick Bollore and has said he wants his son to eventually take over as chief executive of Vivendi.

“Joining forces with Vivendi ... will provide us with the strategic and financial means for us to develop during a time where the industry is undergoing rapid consolidation and is threatened by increasing competition from companies coming from other sectors,” Yannick Bollore said in the statement.

$1 = 0.8422 euros Reporting by Alan Charlish; Editing by David Evans and Edmund Blair

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