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Havas says recovery starting but needs to gain market share

LONDON - Havas's fortunes looked up in the second quarter as it returned to organic revenue growth in the UK, and beat analysts' expectations with overall organic revenue growth of 3%.

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While the UK managed to hit positive growth, the picture in France was less positive. Organic growth in France was negative at -1.6% in the second quarter, only 0.2% in the first half overall.

In the UK, where organic growth shrank by 3.3% in the first quarter, a strong performance by Media Planning Group and spending by healthcare clients put the group back on course with 4% organic growth in the second quarter.

The figures surprised analysts, who had expected overall growth of 1.7% after the group lost key clients Volkswagen and Intel last year. Actual overall second quarter revenues were €370m (£255.1m).

They cement the first-quarter growth figure of 1.4%, which was a confidence boost for then CEO and chairman Alain de Poulzilhac but ultimately failed to help him repel the approach of major shareholder and now chairman Vincent Bollore.

The management was guardedly optimistic about the results, with the new executive committee saying the figures were the start of an upturn for the French advertising group, which has suffered major account losses.

"These figures reflect the start of the group's recovery, but they must be significantly improved upon by regaining market share in order to close the gap with our competitors," Havas said.

The second-quarter results show Bollore, who took control of Havas in June, that the company is on the mend after its restructuring in late 2003 and 2004.

Client wins including Radio Shack and Sony in the US, and News Corporation and Superdrug in the UK, helped it amass nearly €500m (£344.8m) of net new business during the quarter.

However, the geographical picture was mixed, with the UK's improvement and Latin America's 18.2% growth offset by declines in France of 1.6% and in Asia Pacific of 8.6%.

Europe, excluding the UK and France, saw growth of 14.1% thanks in part to an impressive performance by MPG in Spain.

This morning Havas shares were up 3% €4.34 to €4.48.

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