2nd UPDATE: Havas Shares Surge On Resilient 1st Half, Good July Trend
September 01 2009 - 9:16AM
Dow Jones News
French advertising group Havas SA's (HAV.FR) share price surged
Tuesday as chairman Vincent Bollore said operating profit and
pretax profit rose strongly in July from a year earlier and after
better than expected results late Monday, prompting a series of
analysts to upgrade the stock.
At 1230 GMT, Havas shares rose 13.5%, or EUR0.29, to EUR2.41.
The stock had opened 10% higher after the company late Monday
disclosed better-than-expected first-half and second-quarter data,
and cut its debt.
Bollore told reporters and analysts Tuesday that pretax profit
rose 40% in July from 12 months earlier. He didn't provide an
operating result for the month, however, stressing that July is
just one month and said he isn't yet able to forecast financial
results for the full year, having previously said organic revenue
would fall less than 10%. French industrialist Bollore is Havas'
controlling shareholder.
Havas' closely tracked organic revenue fell 9.8% in the
second-quarter hurt by lower ad spending during the economic
downturn. Still that decline beat the 10.7% drop expected by five
analysts polled by Dow Jones Newswires.
In the first half, the company's net profit fell to EUR40
million from EUR49 million, better than EUR25.3 million net profit
expected by analysts. That decline was limited in part by lower
financing charges. Revenue was down to EUR700 million from EUR755
million, however.
The company also noted it has been cutting costs, and at a
meeting Tuesday with journalists and analysts Bollore said Havas
doesn't need exceptional or supplemental cost-cutting programs.
"There was good news on two fronts," analysts at ExaneBNP
Paribas said in an investor note, noting that the margin on
earnings before interest tax, depreciation and amortization
narrowed just 70 basis points to 10.2% in the first half, better
than the 9% margin they had expected and wider than the around 8%
forecast by the market. ExaneBNP also noted that the company cut
debt by EUR150 million, easing fears of a working capital
deterioration in 2009, they added. Exane upgraded Havas to
outperform.
The company cut its net financial debt at June 30 to EUR179
million from EUR340 million a year earlier, helped by the
redemption of a bond earlier this year, lowering its financing
charges 60% in the first half.
Fortis analysts also upgraded their recommendation to buy from
reduce, citing "significant new business wins," stronger than
expected resilience of margins and the likelihood that the business
cycle is bottoming out for ad agencies, among other factors.
Havas said Monday that it maintained its commercial momentum
with net new business worth EUR813 million in the first half,
surpassing its 2008 half-year average and not counting the most
recent account wins such as Heineken in the U.S., AXA in the U.K.
and Coty in France.
Company Web site: www.havas.com
-By A.H. Mooradian, Dow Jones Newswires, +33 1 4017 1740;
art.mooradian@dowjones.com.