French advertising and marketing group Havas SA (HAV.FR) Monday posted an 18% drop in first-half net profit due to lower ad spending and didn't provide an outlook for the rest of the year even though second-quarter organic revenue fell less than expected.

Organic revenue, a closely watched metric in the advertising industry that strips out currency effects, acquisitions and disposals, fell 9.8% in the second-quarter as clients cut media budgets amid the economic downturn.

Five analysts polled by Dow Jones Newswires forecast second-quarter organic revenue to drop 10.7%.

Net profit for the first six months of the year ended June 30 fell to EUR40 million from EUR49 million last year, beating analyst expectations of EUR25.3 million.

First-half revenue fell to EUR700 million from EUR755 million, below an average EUR705 million forecast by analysts.

Havas, which is based in the Parisian suburb of Suresnes and whose clients include French utility Electricite de France (EDF.FR) and car maker PSA Peugeot-Citroen (UG.FR), said operating profit totaled EUR71 million, down from EUR82 million last year but above analysts expectations of EUR54.3 million.

This gave the company an operating margin of 10.2%. Havas said it managed to limit its margin decline during the period with the help of cost reductions across the board.

The company, which has lost several large accounts this year, including French retailer Carrefour SA (CA.FR), also said net new business totaled EUR813 million in the first half.

Digital businesses posted organic growth of 5% and now account for 16.4% of group revenue, Havas added in a statement.

The owner of the Euro RSCG advertising agency in its statement Monday did not provide any guidance for the rest of the year. In June, Chairman Vincent Bollore said that he expected organic revenue to decline a maximum of 10% in 2009.

The advertising industry has been hard hit by the global recession, as marketers cut back ad spending, causing advertising companies to lay off thousands of workers and trim costs as revenue shrinks.

Last week, rival WPP PLC (WPP.LN) cautioned that improving sentiment in the world economy isn't yet translating into rising orders for expensive advertising campaigns and U.K.-based rival Aegis Group PLC (AGS.LN) cautioned that it doesn't expect an upturn in the advertising market in the second half.

Still, other ad industry executives, such as Publicis Groupe SA (PUB.FR) Chief Executive Maurice Levy and Omnicom Group Inc. (OMC) Chief Executive John Wren, last month indicated that the worst of the downturn was over.

Havas shares Monday closed at EUR2.13. The stock has gained about 45% since the beginning of the year, despite worries that smaller advertising holding companies like Havas and Aegis are more vulnerable to the downturn as their businesses are less diversified.

French industrialist Bollore is the controlling shareholder in Havas, the last big advertising holding company to report earnings. He also owns nearly 30% in Aegis.

Company Web site: www.havas.fr

-By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 40; ruth.bender@dowjones.com