PARIS: Havas posted a 1.5% increase in organic growth for its third quarter revenues, compared to about 9% a year ago. The holding company, which includes Euro RSCG Worldwide PR and Abernathy MacGregor, said a drop in investment in North America in the tourism, finance, and health sectors, a negative exchange rate, and the loss of a Dell account in Asia, negatively affected the quarter's earnings.
In North America, organic growth retreated to a negative 1.5%. Total revenues in the region were about $142 million, compared to about $162 million a year ago. With all regions combined, Havas earned about $458 million in Q3 revenues, compared to about $466 million in the year ago period.
"Overall, on the North American level, Havas results were not spectacular," David Jones, global CEO of Euro RSCG Worldwide and MD of Havas, told PRWeek. "But Euro RSCG Worldwide results were strong. The PR business—Euro RSCG Worldwide and Abernathy—both had strong quarters and did well."
The company, though, says it expects to maintain its target operating margin for 2008 of between 11% and 12%. Earlier this year it had reported that net income was up 40% for the first half of the year.
"We'll see how 2009 plays out," Jones added. "In corporate and financial PR, a lot of companies need it now more than ever. As clients look to generate more bang for their buck, I think [we'll see] more money out of advertising and into PR and digital. As an industry, we're probably into 12 to 18 months of a more difficult environment. But digital is alive and well."
So far this year, Havas has earned global revenues of about $1.42 billion, compared to $1.39 billion last year, and an organic growth of 5.8%. The company pointed to a strong Euro causing a negative exchange rate impact of almost $83 million on the group. At constant exchange rates, revenues for the first nine months were up 8.2%, compared to a 1.8% increase while using current exchange rates.
Separately, Havas announced that it is reorganizing and consolidating its groups in the UK, including PR shop, Cake, under one umbrella of Havas Media UK (HMUK). It will have about $824 million in billings, the company said.