Havas Q4: Flat Revenues Hide Rising Salaries Budget

(MoneyWatch)  Havas, like Publicis, is one of those companies that doesn't provide a complete accounting of its quarterly numbers so it is difficult to assess its Q4 earnings release, out today.

Here are some educated guesses: This is a company that is holding its own and hoarding its cash. As everyone knows, it wants to spend that cash to acquire Aegis.

The numbers: Q4 revenues were up 2 percent to ?450 million. Net income for the year was ?112 million, the highest its ever been. And there was a net increase on its cashflow statement of ?286 million.

Havas says it is on an efficiency drive. There has been a marginal improvement in productivity at the agency -- of which Arnold and Euro RSCG are 80 percent. The yield on its operating expenses went up to ?1.14 from ?1.12. Its working capital cashflow went up ?112 million (raising more questions about why Omnicom's went down).

But the agency is still much less productive than some of its peers. Aegis, Omnicom, WPP and Publicis all get more revenues per euro of operating expenses than Havas does. So there's fat in this operation that can still be cut.

One area is salaries. Havas's salaries bill went up by ?10 million euros to ?975 million last year. That was still less than the increase in revenues, but those revenues are essentially flat. This is not a company that should be spending more on staff when revenues are flat, particularly with 2009, likely to be a bad year, still ahead.

• See BNET's previous coverage of Havas:
• The Havas-Aegis Deal Worst-Case Scenario
• With CEO Out, Wall Street -- and Havas? -- Plot Demise of Aegis