Havas 2008 Annual Results
Net Income, Group Share: EUR104 Million, up by 25%
Net Debt Down Sharply to EUR79 Million
SURESNES, France, March 2 /PRNewswire-FirstCall/ -- Annual revenue: EUR1,568 million; organic growth +4.7%; reported growth +2.3% Q4 organic growth of 2.0%: one of the sector's best performances despite a high comparison basis (Q4 2007 of +9.8%) Operating income: EUR189 million, up +12.5% on 2007, operating margin at 12.1% compared to 11% in 2007 and 8.2% in 2006 Net income, Group share: EUR104 million at +25% on 2007, and double the level of 2006. Significant improvement in gearing(1) (8%) with net debt divided by 3 compared to 2007 and reduced to EUR79 million. Net New Business(2) still strong at EUR1.6 billion Strong growth in digital business which now accounts for 14% of total revenue. Targets set in the 2006 4-year plan achieved one year early: Organic growth (+ 4.7%) now up amongst the market leaders Operating margin (12.1%) well within the industry average Net debt reduced by a factor of 5 compared to 2006 and one of the lowest gearing(1) in the sector
"For the first time in its history, Havas posts a net income of over
This performance bears out the pertinence of our operating plan introduced in 2006, when we launched a far-reaching program of winning new markets, restoring our margins and reinforcing the Group's financial structure. At the time, we set ourselves two major targets to achieve four years out:
- the highest annual growth rate in the market; - profitability in line with that of the profession.
Thanks to the results reported for 2008, we have achieved these targets a year early. All Havas' fundamentals - organic growth, New Business, profitability and financial capacity - are now positive and competitive once again.
These results were made possible by the trust our clients have placed in us. They are the outcome of the hard work, creativity and cohesion of all the Group's teams all over the world, and our executive committee would like to thank them for their dedication and their commitment to our clients."
The Board of Directors, meeting on
2008 2007 2006 Operating income 189EURM 168EURM 121EURM Operating margin 12.1% 11.0% 8.2% Net income (Group share) 104MEUR 83MEUR 46MEUR Net debt 79MEUR 226MEUR 382MEUR Digital business 14% 11% 9% 1. Revenue Group revenue for 2008 was EUR1,568 million, for organic growth of +4.7%.
Agencies including Euro RSCG New York, Euro RSCG Chicago, Euro RSCG
London and KLP Euro RSCG, posted double-digit organic growth, while Euro RSCG
C&O, Euro RSCG Life USA and BETC Euro RSCG significantly outperformed the
market. In the
All Havas Media agencies have posted growth above the market average or
in double-digits and for the first time in certain countries such as the
Reported revenue grew by +2.3% over 2007, mainly due to a weak US dollar
and UK pound against the euro. The overall negative exchange rate impact on
the Group was
The fourth quarter of 2008, with revenue of
Growth continued to be sustained in all mature markets, except for Arnold
The breakdown of revenue by region in Q4 and full year 2008 was as follows:
By Region Q4 2008 Full Year 2008 Revenue Organic Revenue Organic (in EURM) growth(%) (in EURM) growth(%) EUROPE 265 3.3% 923 5.4% of which France 99 6.0% 339 3.6% UK 52 2.0% 200 4.8% Rest of Europe 114 1.6% 383 7.4% NORTH AMERICA 131 -2.0% 477 2.1% REST OF THE WORLD 54 6.5% 168 8.4% of which Asia Pacific 21 -7.8% 72 1.8% Latin America 33 17.1% 96 13.8% TOTAL 450 2.0% 1,568 4.7% 2. Results - Operating income rose to EUR189 million, an increase of +12.5% over 2007 and of +56% over 2006. Operating margin of 12.1% in 2008 gained +110 bps over 2007 and +390 bps over 2006, thanks to continued efforts to contain costs. - Net income, Group share of EUR104 million in 2008 was up +25% on 2007 and 126% up on 2006. - Earnings per share increased by +26% to 24 cents (EUR) in 2008 compared to 19 cents (EUR) in 2007 and 11 cents (EUR) in 2006. 3. Financial structure The Group's financial structure underwent further reinforcement in 2008: - Net debt at December 31, 2008 was reduced to just EUR79 million compared to EUR226 million at December 31, 2007, a reduction of 65%, - At December 31, 2008, gearing was 8%, with net debt representing 4 months' EBITDA, - debt maturity, which had already been extended from two and a half years in 2006 to four years in 2007, remains at over four and a half years at the start of 2009, - and average debt(3) over full year 2008 was EUR295 million, down by 24%. This considerable reduction in net debt is due to: - a high level of cash generation thanks to strong results and unremitting attention to the Group's rigorous cash management policy: operating cash flow was EUR292 million in 2008 compared to EUR264 million in 2007 and EUR86 million in 2006, - and a lower level of financial investment at approximately EUR58 million paid out over the 2008 financial year.
The improvement in its cash position left the Group with cash of
In addition, the Group's liquidity is highly satisfactory with unused
medium term credit lines of
4. Net New Business(2)
Net new business remained very buoyant throughout the year. At
Euro RSCG continued to add major global clients and advertising assignments in 2008 - the largest global wins in 2009 included: New York Stock Exchange, Chivas (Pernod Ricard), Numico (Danone's newly acquired global baby food division) and Jaguar's Global Digital business. These wins together with new assignments from existing clients such as Kraft (Ritz Europe), Reckitt Benckiser and Sanofi Aventis helped ensure that Euro RSCG was named for the 3rd year in a row by Advertising Age as the world's largest agency in terms of global clients.
Havas Media won impressive new clients at global and regional level
Havas Media was able to add major global and regional wins such as
We can also note the strong performance in new business of other agencies within Havas Worldwide which won prestigious new clients including Monoprix, Carnival Cruises and Volvo, amongst others.
Please refer to Appendix 2 for more detail on 2008 New Business.
2008 set the seal on the improvement in profitability and financial structure that the Havas Group has been pursuing since 2006.
Thanks to strong cash generation and tight control of costs and WCR, Havas now boasts one of the strongest financial structures in its sector and one of the lowest levels of net debt in the market.
This position of strength enables us to face the current challenging economic climate with confidence in the Group's ability to transform New Business into extra revenue and to pitch successfully for new accounts.
The Group adopted a more agile and simplified structure by organizing itself around two main Business Units: Havas Worldwide and Havas Media. The Group will continue to prioritize organic growth by encouraging cooperation between its two business units and putting digital at the heart of all our businesses in all our markets. We see our well-established positions in mature markets as giving us an advantage in view of the expected slowdown in emerging markets.
We will also continue to focus on innovation - in tools and ideas - to refine our analysis of new consumer attitudes and behavior and to measure the efficacy of communication strategies with ever greater accuracy in order to create value for our clients.
6. Major Digital Awards
The latest Big Won Report ranked BETC Euro RSCG's "Ad Auction" campaign for eBay as the 4th most awarded Alternative & Innovative Media Campaign worldwide.
The New York Festivals Innovative Advertising Awards presented a Gold and
Silver to Euro RSCG 4D
The "Beat Billy" campaign, created by Euro RSCG Singapore for The Crowbar Awards, was named Interactive Campaign of the Year at the Singapore Advertising Hall of Fame.
The WebAwards awarded the group's agencies with a total of 11 prizes to
Euro RSCG 4D
InfoBrand Magazine ranked Euro RSCG Buenos Aires as number one in their
Top 10 of the most innovative agencies in
At the EPICA Awards BETC Euro RSCG won 2 Silvers for "Adopt Sci Fi" (NBC
Universal) in the Web and Integrated category as well as a Bronze for "Tower
of Terror" (Disneyland Paris) in the web category. Euro RSCG 4D
At the Meribel Ad Festival BETC Euro RSCG took home a
Media Contacts Spain won Gold as Best Online Media Agency at the
Interactive Awards in
BLM Quantum was named 2008 UK Digital Agency of the Year at the IMA Awards.
Havas Digital US was named "Bronze Award Agency of the Year 2008 for Media Planning & Buying" by OMMA
At the Cannes International Advertising Festival, Media Contacts/MPG Spain and AIS (UK) won 2 Bronze Cyber Lion Awards for Atrapalo.com and O2 respectively.
Havas Media won 5 awards at the Eurobest, including a Grand Prix for the Launch of the BBC's Video on Demand Service, iPlayer, created by MPG London and Media Contacts UK.
Media Contacts/Mobext Brazil won Gold for Citroen at the MMA Awards in the Cross Media Integration category.
Lattitud Spain won a Bronze EFI award for Editorial Planeta "La Ruta prohibida" in the Campaign Media Efficiency category.
AIS won the IAB award for Indigo O2 at the IAB Creative Showcase Awards.
Media Contacts Argentina won 2 Silver AMAUTA awards for its campaigns for Coca-Cola Zero and Repsol YPF and 2 Bronzes for Renault.
Media Contacts/MPG International UK and Media Contacts Italy won Best Financial Advertiser for their trading game initiative for BGI iShares at the M&M Awards.
At the AOL/Media Week Awards, Media Contacts/MPG UK won Best Cross Media campaign for Camelot.
Havas Digital collected some thirty major awards for its interactive and cross-media campaigns at national and international level.
7. Major Creative Awards
BETC Euro RSCG was named Creative Agency of the Year by CB News.
Euro RSCG Prague was named Advertising Agency of the Year for the second time in a row (and for the 4th time in 5 years) by Strategie and the Czech Association of Communication Agencies (AKA).
Euro RSCG C&O was named Best Corporate French Agency at the Sabre European Awards.
In November, MPG Argentina won the
Havas Media France, Havas Sports France and Compagnie
MPG Poland was named "Best Agency of 2008" by Media i Marketing Polska.
BETC Euro RSCG won a Yellow Pencil at the D&AD Awards in the broadcast innovation category for its eBay campaign, making it the second French agency to have won this award in 45 years.
At the Cresta International Advertising Awards in October,
At the London International Advertising Awards,
At the "El Ojo de Iberoamerica" Latin America festival, Euro RSCG Buenos Aires, Euro RSCG Santiago, Euro RSCG Sao Paulo, Euro RSCG Lisbon, Euro RSCG Spain and Euro RSCG Vice Versa notched up a total of 15 awards, including 3 Golds.
At the EPICA Awards, one of Europe's largest award shows, BETC Euro RSCG,
Euro RSCG Mundchen, Euro RSCG Zurich, Euro RSCG London, Leg, Euro RSCG
Athenes and Euro RSCG 4D
At the Meribel Ad Festival, BETC Euro RSCG emerged as the most awarded agency, taking four Cristal awards including two Grand Cristal France and Europe trophies (Integrated and Media) for eBay's "Ad Auction" campaign.
Euro RSCG Shanghai won 5 prizes (2 Silver and 3 Bronze) at the Long Xi Global China Advertising Awards and Euro RSCG Hong Kong won 2.
APPENDIX 1: Financial Information in EURM 2008 2007 Variance 2008/2007 Revenue 1568 1532 2.3% Organic growth +4.7% Income from operations 188 169 +11.2% 12.0% 11.0% Operating income 189 168 +12.5% 12.1% 11.0% Net income of fully consolidated companies 112 91 +23.1% 7.1% 5.9% Net income, Group share 104 83 +25.3% 6.6% 5.4% in EURM as of as of Variance December December 12/31/2008 31, 2008 31, 2007 vs 12/31/2007 Total consolidated equity 1015 978 3.8% Net financial debt 79 226 -65.0 Net financial debt / Total consolidated equity 0.08 0.23 Earnings per share (in EUR) 0.24 0.19 26.3% Average net debt 295 389 -24.2% APPENDIX 2: New Business Havas Worldwide Euro RSCG:
Alico, AstraZeneca, Auchan, Aurum, Bank of
Air Liquide Fondation d'Entreprise, Axa, Babies R Us, Candia, Carnival,
France Tele Numerique, Generale de Sante,
118118, Air France,
Havas (Euronext Paris: HAV.PA) is a global advertising and communications
services group. Headquartered in
Further information about Havas is available on the company's website: http://www.havas.com
This document contains certain forward-looking statements which speak
only as of the date on which they are made. Forward looking statements relate
to projections, anticipated events or trends, future plans and strategies,
and reflect Havas' current views about future events. They are therefore
subject to inherent risks and uncertainties that may cause Havas' actual
results to differ materially from those expressed in any forward-looking
statement. Factors that could cause actual results to differ materially from
expected results include changes in the global economic environment or in the
business environment, and in factors such as competition and market
regulation. For more information regarding risk factors relevant to Havas,
please see Havas' filings with the Autorite des Marches Financiers (documents
in French) and, up to
Net debt at 31 December / Equity ratio at 31 December
(2) : Net New Business
Net new business represents the estimated annual advertising budgets for new business wins (which includes new clients, clients retained after a competitive review, and new product or brand expansions for existing clients) less the estimated annual advertising budgets for lost accounts. Havas' management uses net new business as a measurement of the effectiveness of its client development and retention efforts. Net new business is not an accurate predictor of future revenues, since what constitutes new business or lost business is subject to differing judgments, the amounts associated with individual business wins and losses depend on estimated client budgets, clients may not spend as much as they budget, the timing of budgeted expenditures is uncertain, and the amount of budgeted expenditures that translate into revenues depends on the nature of the expenditures and the applicable fee structures. In addition, Havas' guidelines for determining the amount of new business wins and lost business may differ from those employed by other companies.
(3): Average Net debt
Average Net debt (quarterly or annually) is calculated for the main 4
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