Havas pumps up profit in 2004

3rd March 2005, Comments 0 comments

PARIS, March 3 (AFP) - The French advertising firm Havas said Thursday it had swung into profit in 2004, lifted by higher-than-expected operating profit and margins, and targeted better earnings this year mainly due to cost savings.

PARIS, March 3 (AFP) - The French advertising firm Havas said Thursday it had swung into profit in 2004, lifted by higher-than-expected operating profit and margins, and targeted better earnings this year mainly due to cost savings.

Net profit at the world's sixth largest advertising group was EUR 34 million (USD 44.68 million), compared with a loss of EUR 396 million a year earlier, but short of a median consensus quoted by JCF Group in Paris of EUR 40.64 million.

Operating profit was EUR 197 million, up 45 percent from EUR 136 million a year earlier and above a median consensus quoted by JCF of EUR 187.57 million.

Chief executive Alain de Pouzilhac called the results "spectacular" and said they demonstrated the "perfect execution" of the group's restructuring. "Havas has really turned the corner over the past 18 months," he said in a statement.

Havas expects its operating margin to reach 15 percent in full-year 2006, "one year in advance" of its previous target of full-year 2007, the CEO said at a news conference following the 2004 results.

Havas had a margin of 13.2 percent in 2004, up from 8.3 percent in 2003.

The previous guidance, to reach 15 percent by 2007, was given in November.

Free cash flow, excluding proceeds for last year's capital increase, was EUR 103 million and the group planned to pay a dividend of EUR 0.07, up 40 percent.

The number of Havas shares increased by 40 percent also in 2004, thanks to the capital increase.

Net debt at end-December fell to EUR 226 million from EUR 642 million a year earlier, far lower than the EUR 323 million expected by broker Exane.

Havas said net new business in 2004 was valued at EUR 1.5 billion in billings, up 59 percent on constant exchange rates from the year earlier.

Havas had been hurt by an overall slump in the advertising market and sustained a net loss of EUR 396 million in 2003 on sales that fell 17.2 percent.

Despite the swing into profit in 2004, there were several tough challenges along the way. Havas failed in its bid to acquire US rival Grey, the world's seventh largest advertising firm, and lost two big customers, Intel and Volkswagen.

Shares in Havas were sharply higher as analysts welcomed the company's return to profitability in 2004 and higher-than-expected operating profit and margins, dealers said.

Havas rose 2.91 percent to EUR 4.59 in midday Paris trade in a generally softer market, with the CAC 40 off 0.22 percent at 4,053.06 points.

Cheuvreux analysts maintained their 'outperform' rating with a share price target of EUR 4.80.

"The company's operating profit was better-than-expected with an EBIT (earnings before interest and tax) margin above 14 percent in the second half," the analysts said in a statement, noting the company's balance sheet remained strong.

Exane BNP Paribas analysts said Havas reported "good" full-year results, noting the company's full-year EBIT margin of 13.2 percent exceeded their forecasts for a margin of around 12.8 percent.

"This implies a good performance in the second half, reflecting the improvement of the group's organic growth trends and the effect of the cost-cutting programme," Exane BNP Paribas said.

© AFP

Subject: French News

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