Margins slide at Havas as CEO amends growth forecast

Havas CEO Yannick Bolloré (below) hopes the French group's growth and profitability will improve "slightly" in the second half of 2017 after it "suffered a slowdown" in H1 2017.

Revenue at Havas Group totalled €1.108bn ($1.316bn) in the first half of 2017, a rise of 1.9 per cent year on year.

Its operating margin fell by more than a quarter, from 12.6% in H1 2016 to 9% for the first half of 2017. The group's headcount reached 20,133 by the end of the period, a rise of nearly 700.

CEO Yannick Bolloré said: "Although the group's momentum is positive, Havas' financial performance in the first half of 2017 suffered a slowdown that affected the industry as a whole and led to revenue and profitability below our expectations.

"This can be explained mainly by a greater-than-expected decline in investment from advertisers, increasing pressure on margins during contract negotiations and renegotiations, and the macroeconomic downturn in high-growth markets such as Brazil and Mexico where the Group has a large presence, as well as in India and China."

Bolloré's cautious optimism contrasts somewhat with the downbeat tone of WPP's half-year results on Wednesday, in which it announced a group-wide revenue drop and said growth over the last year had been "even more difficult to find".

He added: "While we hope growth and profitability will slightly improve in the second half of the year, these combined factors mean we are unable to confirm our forecast of organic growth between +2 per cent and +3 per cent, announced at the beginning of the year."

The firm does not provide a breakdown of results for its PR agencies.

It does however provide a regional breakdown. Performance in Europe was said to be "stable," despite difficulties in the UK "largely due to major client, Unilever, cutting back its advertising spending, and the loss of certain media accounts," while Italy and Germany performed strongly.

North America "ended the first half down slightly, mainly due to the low level of new business wins in the last quarter of 2016."

In July, Vivendi bought Bolloré Group's majority stake in Havas, leading Bolloré to say today: "Joining forces with Vivendi, whose ambition is to become the world leader in content, media, and communication, is exciting. Vivendi will provide us with the strategic and financial means to develop during a time where the industry is undergoing rapid consolidation and is threatened by increasing competition from companies from other sectors."

Read next: WPP warns industry risks 'losing the plot' over client renewal incentives 

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