Havas hit by rising costs

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Operating income fell by a headline 34 per cent at Havas in the first half of 2006 with the Paris-based marketing services group citing rising costs including from strengthening its effort to win new accounts.

Operating income at Havas, which owns the Euro RSCG creative agency network and Media Planning Group, the media buying business, dropped from E75m to E56m in the six months to June 30. Revenue was almost flat in organic terms at E719m (E700m).

Havas said talent hirings and the expansion of its new business teams had impacted its operating margins, which fell from 10.8 per cent to 7.7 per cent during the period.

Net new business at Havas rose sharply in the six months to June 30 to about E900m of won billings - which include revenues passed to non-Havas companies, compared to E500m in the same period of 2005.

The figures do not include the recent appointment of Euro RSCG to handle the worldwide advertising of Reckitt Benckiser, the household goods company.

Net income was E21m, down from E34m a year before. Net debt also rose to E648m at June 30, from E492m the year before.

Shares fell from E3.87 to E3.85.

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