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Investing.com -- Shares of Havas leaped 8% following the company's announcement of solid first-quarter performance, surpassing market expectations with a 2.1% organic net sales growth. This exceeded the forecasted 1.0% growth rate, signaling robust business momentum.
Havas's performance was bolstered by significant gains in North America, which saw a 3.2% increase, and a standout 16.6% organic growth in Latin America. Despite a slight downward revision in earnings per share (EPS) estimates for the coming years, Havas confirmed its 2025 fiscal year guidance, maintaining a positive outlook with anticipated organic net revenue growth above 2% compared to the previous year and an adjusted EBIT margin between 12.5% and 13.5%. The dividend payout ratio is expected to be around 40%.
CFO François Larroze addressed the potential impact of macroeconomic uncertainties, particularly the tariff overhang, during the earnings call. He emphasized Havas's resilience as a service company, noting that there have been no client freezes or cuts thus far, and assured stakeholders of the company's agility to respond to any negative shifts in the macro environment.
Larroze also highlighted that the drivers of organic growth for the quarter were primarily in the Media and Health sectors, both of which experienced double-digit growth. This comes as a recovery from a challenging 2024, marked by the loss of Pfizer (NYSE:PFE) as a client.
The company's share buyback plan was confirmed by Larroze, with intentions to repurchase up to 10% of issued share capital after the annual general meeting on May 28, as part of the strategy outlined in the FY24 results call. The buyback is modeled at €40 million for 2025, representing 3.3% of the current market cap.
On the topic of foreign exchange impacts, Larroze commented on the potential effects of a shifting US dollar, noting that while the dollar had a positive €9 million impact on revenue in the first quarter, the influence on EBIT is less pronounced due to the majority of US expenses being in dollars.
In response to Havas's performance and strategic plans, Barclays (LON:BARC) commented, "Havas appears cheap especially with a buyback starting after the AGM. Our upside-downside scenarios are also appealing."
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