Dentsu Group: India biz showing "encouraging signs" after long period underperformance

Dentsu said it will focus on strengthening cross-selling across APAC as it rolls out the One Dentsu strategy in the region.

By  Storyboard18Aug 16, 2024 9:17 AM
Dentsu Group: India biz showing "encouraging signs" after long period underperformance
In APAC excluding Japan, organic growth rate improved from the first quarter, Dentsu said, despite client losses from last year continuing to impact results.

Japanese ad giant Dentsu Group Inc announced its quarterly results this week as it returned to growth in the second quarter ended June 30, 2024. Dentsu reported an improvement of 0.2% organic revenues yoy.

The advertising holding group stated that there are some "encouraging signs" including "positive organic growth in all practices in India after a long period of underperformance, as client loss have bottomed out."

For Q2 FY2024 (April – June) Results: Dentsu reported the following Key Financials

Group net revenue JPY 287.4bn (YoY 11.0%) • On a constant currency basis Japan reported 1.8% growth in net revenue in the second quarter, the Americas a decline of 0.2%, EMEA an increase of 13.9% and APAC growth of 2.6%. • Reported net revenue increased 11.0% with currency positively impacting by JPY 18.7 bn and M&A contributing JPY 9.3 bn.

Group organic growth 0.2% • Q2 in Japan, organic growth supported by double-digit growth in Internet media and increased client spend from existing clients plus new client wins. The Americas reported Q2 organic revenue decline of 3.7%, showing continued quarterly recovery from Q423. EMEA reported organic growth of 7.8%, mainly due to one-off negative impact of prior year. Media performance in local markets was stronger than expected in Q2, and is expected to remain steady in H2. APAC reported organic revenue decline of 6.2% as CT&T (Customer Transformation and Technology) remains challenging, particularly in Australia due to client losses. However, full-year forecast is in line with expectations with continued initiatives to support turnaround of the business.

Group underlying operating profit increased 47.9% yoy to JPY 33.2 bn. Operating margin increased by 290bp to 11.5%. • The rise in operating profit yoy is due to improving revenues delivering operating leverage. Cost management ensured margin delivery and is on track to deliver the FY2024 guidance of c. 15%

Group underlying net profit (attributable to owners of the parent) increased by 46.7% yoy to JPY 17.1 bn

APAC Q2 organic revenue -6.2%, H1 organic revenue -6.6%

In APAC excluding Japan, organic growth rate improved from the first quarter, Dentsu said, despite client losses from last year continuing to impact results. It added that Creative reported largely steady spending by large clients, with increment of client spend in sectors such as automotives. After a long period of underperformance, there are some encouraging signs including positive organic growth in all practices in India. Dentsu said client loss has bottomed out in India. China is performing better than internal expectations, the group added.

In the second half of the year, Dentsu said it will focus on strengthening cross-selling across the region as it rolls out the One Dentsu strategy in the region.

Hiroshi Igarashi, President and Global CEO, Dentsu Group Inc., said: "Over the last six months, we have made decisive progress in aligning our people, brand, and market presence to strengthen our dentsu proposition. We have unlocked our collective power and potential by operating as One dentsu, which is beginning to show a positive impact on performance."

He added, "Our H1 net new media wins across Americas, EMEA and APAC are the highest for the past five half years and Japan has seen a recovery in pitch win rates. We can see the implementation of One dentsu is affecting positive change within our organization."

First Published on Aug 15, 2024 12:00 PM

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