Havas Sees Ad Sales Slowing Next Year on China Rout, Brazil

  • Business in Brazil also faces challenges in first half 2016
  • WPP's Sorrell says business is tough, clients cost-focused

Havas SA, the French advertising agency majority-owned by billionaire Vincent Bollore, expects growth to slow next year after the stock market rout in China weighed on emerging economies.

Havas’s Chief Executive Officer Yannick Bollore, one of Vincent’s three sons, said the company’s outlook for 2016, which was “super positive” in June, deteriorated slightly in July and worsened in September. French peer Publicis Groupe SA last month cut its full-year revenue forecast and said it had no growth in September after some clients canceled and postponed campaigns.

“The situation is not as bright as it used to be three months ago,” Yannick Bollore said at an investor conference hosted by Morgan Stanley in Barcelona on Thursday. He said Brazil may still face challenges in the first half of 2016 and the year will be one “of consolidation after two very strong years of growth.”

WPP Plc CEO Martin Sorrell, meanwhile, confirmed full-year forecasts at the world’s largest ad company. Still, he said business was tough and that clients are focused on costs. 

“It’s a tough world, and it will continue to be,” Sorrell said at the Barcelona conference. He said China remained “very volatile.” Sorrell reiterated WPP’s full-year forecast for 2015 of like-for-like revenue and net sales growth of more than 3 percent. He said that October business at WPP was strong and possibly “the best month of the year, by some considerable distance.”

Shares of Havas, which has created campaigns for the Evian, Durex and Virgin Mobile brands, fell 2.4 percent to 7.80 euros and Publicis declined 2.2 percent to 56.95 euros at 12:17 p.m. in Paris. WPP lost 1.8 percent to 1,475 pence in London.

Bollore said Havas will continue to invest in emerging economies though it’s not expecting previous double-digit growth. He also said he expects the U.S. to turn into an “engine of growth,” and that the company is in talks with a “big prospect” from the telecommunications sector.

Havas’s revenue grew 18 percent to 1.55 billion euros ($1.67 billion) in the first nine months of the year, with so-called organic growth of 6 percent.

The Paris-based company is also developing ties with Vivendi SA’s Universal Music record label to figure out how to use and monetize data on hundreds of millions of music fans. 

“It’s a completely new era and new territory,” Bollore said, pointing out that much of the content on YouTube is music videos. Having “preferential access to that catalog is a competitive advantage for Havas.”

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