NEW YORK—After a major fall in profits, French communications holding company Havas will implement a strategic reorganization that will make several subsidiaries—including U.S. public relations firm Magnet Communications—part of the Euro RSCG operation, which already includes PR units Middleberg and Noonan Russo.
Havas group posted operating profits of £47m in the first half of the year, down 41 percent from £80m last year. That meant a net loss of £41m for the six months to the end of June, compared with a £10m profit last year.
According to chairman Alain de Pouzilhac, the new strategy aims “at dramatically improving the efficiency of the Group, its competitiveness and financial performance.” It will include the sale or closure of about 20 businesses, and about 850 layoffs.
As part of the reorganization, Arnold Worldwide will concentrate all of its development efforts on local markets with significant potential, primarily in the U.S., while Euro RSCG Worldwide will become the only Havas globally integrated communications brand, expanding its integrated marketing services capabilities.
“We are in a market characterized by a strong lack of visibility,” said de Pouzilhac in a statement. “Even if there are signs of an upturn in the USA we must remain very cautious about its potential implications for future investments and a recovery in the broader global markets. In this environment it is no longer the number of networks or agencies that is important but the number and the quality of creative and innovative ideas proposed to clients that counts as well as the ability to deliver those ideas across fully integrated communications agencies.”