Dentsu Group's global chief Hiroshi Igarashi stresses on integrated growth solutions

Dentsu Group reported Q1 organic growth of -3.7%. The soft start to the year was in line with internal expectations, the Tokyo-headquartered global ad holding company said in a statement. Looking forward, the Group reiterates FY2024 organic growth guidance of c. 1% and margin guidance of c. 15%. The Group continues to expect the recovery in organic growth to be second half weighted, with confidence underpinned by new client wins and the easing of existing headwinds.

Customer Transformation & Technology (CT&T) is reported at 30% of Group revenues, lower yoy given the cyclical downturn within the segment, strength in the media businesses and a realignment of revenues internally into other practise areas as we look to ensure our services and offerings are globally consistent. This had an impact on our revenue ratio and will continue to impact throughout this year.

In 2024, focus remains on internal investments and returning the Group to growth, the company said, adding that the Group continues to accelerate the shift to One dentsu to create a unified global network, further integrating the group’s diverse capabilities.

Group net revenue JPY 286.4bn (YoY 6.3%, -1.0% at constant currency) • On a constant currency basis Japan reported 2.3% growth in net revenue in the first quarter, the Americas a decline of -1.4%, EMEA a decline of -4.2% and APAC growth of 0.6%. • Reported net revenue increased 6.3% with currency positively impacting by JPY 18.1 bn and M&A contributing JPY 9.9 bn.

Group organic revenue decline -3.7% • Q1 in Japan, organic growth was robust and ahead of expectation with a continued recovery in advertising, double-digit growth in Internet media and a healthy TV spot market. The Americas reported Q1 organic revenue decline of -6.6%, a soft start to the year due to continued cyclical pressures in CT&T, although Q1 results were in line with internal forecasts. EMEA reported organic revenue decline of -9.4%, but with a mixed performance across the region. APAC reported organic revenue decline of -7.1%, in line with expectations with improvements in some markets, including China.

APAC Q1 organic revenue -7.1% • APAC ex Japan reported organic decline, although results were ahead of internal forecasts. Media reported momentum in client spend in China. Creative reported a reduction in client spend in a number of markets, but has momentum with client wins in India & China which are yet to impact revenues. India is still impacted by the annualization of client losses in media from Q2 2023. In Southeast Asia, there was a modest improvement in organic growth in Thailand as TV spend continued to resume post government formation in Q3 last year. The Philippines saw continued momentum following strong new business wins at the end of Q4. The region is on track to deliver forecasted results for the full year with the cycling out of clients lost in 2023 and an easing of comparables into the second half.

Hiroshi Igarashi, President and Global CEO, Dentsu Group Inc., said, "The first quarter delivered an organic revenue decline of -3.7%, in line with our internal forecasts and leaving us on track to deliver our guidance of c. 1% organic growth for the full year 2024. Our confidence comes from a stronger outlook in the second half of the year. The Group will benefit from momentum in client wins, yet to impact revenues, from cycling out of accounts lost in 2023 and a significant easing of comparables."

"We believe the future of our industry is driven by client demands for greater integration of services," he said. "Clients are searching for a marketing transformation partner that can deliver true integration of media, dynamic content and data insights via solutions that seamlessly connect brand potential to business impact. This aligns perfectly with our strategy of growing our clients’ businesses through integrated growth solutions."

Igarashi reiterated, "Our promise to clients is that we are innovating to impact. By simplifying and integrating our offerings into an ecosystem which makes sense to clients, we can continue to push the boundaries of what’s possible through experience and business transformation."