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 its expectations, Yannick Bolloré, CEO Havas Group, said.
Group revenue in Q2 2017 was €589 million, bringing the H1 2017 total to €1,108 million, an increase of 1.9% on an unadjusted basis. The group’s organic growth was on a decline by 0.9% in Q2 2017 and negative 0.4% for H1 2017, which is below its initial forecast of 2% to 3%.
According to Bolloré 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.
“While we hope that growth and profitability will slightly improve in the second half of the year, these combined factors mean that we are unable to confirm our forecast of organic growth between 2% and 3%, announced at the beginning of the year,” he added.
However, APAC and Africa, said the group, saw a strong performance in Q2 highlighted by a 3.2% rise in organic growth.
China, South Korea, Hong Kong and India were the biggest contributors to this growth, on the back of renewed strength following the Swarovski and BMW account wins and increased spending by clients.
Havas Group strengthened its operations in China by signing a joint-venture with GIMC (Guangdong Advertising Group Co) China's leading advertising company and largest local marketing and communications group. It has expertise in all communications disciplines and is the fastest growing integrated group in the Chinese communications industry.
Meanwhile, Havas Group also acquired Sorento, an India-based health and wellness communications agency. Sorento will integrate the Havas Health & You business unit and be rebranded Havas Life Sorento. This strategic acquisition will allow Havas to further develop its regional presence and add to its depth and breadth in India to deliver for global clients.
Bolloré added that joining forces with French multinational mass media conglomerate Vivendi will provide the group with the “strategic and financial means” for it to develop during a time where the industry is undergoing rapid consolidation, and is threatened by increasing competition from companies coming from other sectors.
“We are working with Vivendi to create synergies and open a new chapter in the history of our Group. A project which creates value for our clients, our talent and our shareholders,” he said. On 3 July 2017, Vivendi acquired the 59.2% stake in Havas held by the Bolloré Group. In the next few weeks and in accordance with market regulations, Vivendi will launch a simplified tender offer on the remaining Havas shares. This offer is not aimed at a delisting of the Havas shares.
Going forward, the group will keep its focus on the #Together strategy, marked by the opening of its 48 Havas Villages.
“Even if this negative impact logically weighs on our organic growth and profitability, we decided to continue investing in our talent. Investment in new villages and in innovation have also contributed substantially to our costs this year, but are key to reaching our mid-term objectives,” Bolloré said.