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Layoffs: Japan's Dentsu to cut 3,400 jobs abroad as part of restructuring effort
Dentsu Group Inc. will cut 3,400 overseas jobs and explore partnerships abroad as it targets higher margins and $355 million in annual cost savings.
Global ad holding company Dentsu Group Inc., said it will eliminate about 3,400 jobs in markets outside its home country — roughly 8 percent of its head count in those regions — as part of a broad restructuring. The company, which has faced slower growth in overseas markets, said it is considering “forming partnership for overseas operations” to improve efficiency and performance.
Dentsu described itself as making “steady progress” toward a goal of reaching an operating margin of 16 to 17 percent by fiscal 2027. The group expects to achieve roughly ¥52 billion, or about $355 million, in annual operating cost reductions — a figure that exceeds its earlier target, it said.
In a statement on the company’s second-quarter results, Hiroshi Igarashi, Dentsu’s president and global chief executive, said the Japan business “achieved record-high net revenue and underlying operating profit” in the first half, with growth for the ninth consecutive quarter. But, he added, “the international business continued to experience negative growth in all three regions, resulting in an extremely challenging performance.”
Citing a “more slowly” recovering CXM unit, ongoing losses in Creative, and macroeconomic uncertainty, Dentsu lowered its full-year organic growth forecast to about zero percent. The group recorded goodwill impairment losses of ¥86 billion in the Americas and EMEA, and will suspend its interim dividend.
Igarashi said the company had “already identified all necessary measures, including the headcount reduction of approximately 8% (approximately 3,400 people) in the international business” as part of its plan to cut annual operating costs by about ¥52 billion by 2027.
“I am acutely aware that reforming the international business is an urgent issue,” he said. “In our international business, we will focus on fundamental improvement measures to restore its profitability and competitive advantage while striving to enhance the corporate value of the entire group, growing as One dentsu.”
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