Dentsu global CEO: We will reevaluate our underperforming businesses, rebuild our business structure

Japanese ad holding company Dentsu Group Inc. released its FY2024 Consolidated Financial Results last week. In FY2024 net revenues increased by 5.7% year on year (yoy), with organic growth broadly flat at –0.1% yoy as guided in November 2024. Sequential quarterly improvement continued through the year with fourth quarter organic growth of 2.6% yoy.

In the new Mid-Term Management Plan announced, Dentsu has set key financial targets for FY2027 of; 4% organic growth, 16-17% operating margin, operating cash flow of JPY 140bn and ROE in mid-teens. Dentsu's focus will be on boldly promoting necessary changes and reforms to once again achieve strong organic growth.

Under the slogan “One dentsu,” the company will continue to enhance its corporate value and realize sustainable development for society and the Group. Fourth quarter revenues in Japan came in ahead of expectations due to better especially in internet media. The Americas has seen sequential quarterly improvements, supported by some growth in Media, yet recovery of the CXM business is still taking time. In EMEA, Media grew at a mid-single digit, with solid performance in some local markets. APAC continues to be challenged with CXM, yet Media was flat yoy.

Hiroshi Igarashi, President and Global CEO, dentsu, said that the Group FY2024 results were in line with the company's November guidance with broadly flat organic revenues, and operating margins higher than expectations. "We saw sequential quarterly improvement throughout the year, with strong performance in Japan. There were also some notable global new wins in the International business. However, we have reported a significant goodwill impairment in the fourth quarter, reflecting a more conservative outlook in EMEA and the Americas. We believe that recognition of these uncertainties will contribute to a sounder balance sheet and a stronger platform upon which to implement the Mid-Term Management Plan announced today," he said.

In Dentsu's new Mid-Term Management Plan, which will run through the years of FY2025 and FY2027, the company plans to achieve organic growth of 4%, and 16-17% in operating margin in FY2027. Dentsu will conduct a thorough review of its core business strengths, be more selective and focused on what they do, and adopt a differentiated strategy to meet its diversifying client needs, Igarashi said.

"While we will continue to invest in data and technology and our people and culture, we will also invest into areas where we can increase our media capabilities in our key markets. At the same time, we will reevaluate our underperforming businesses and rebuild our business structure. Our ultimate goal is to regain competitiveness and return to a growth trajectory," he added.

Igarashi emphasized, "We reiterate our vision to be at the forefront of people-centred transformations that shape society. We will reinforce the One dentsu steps we have been taking and continue to strive forward to further enhance our Integrated Growth Solutions to contribute to our clients’ growth."