Dentsu looks to streamline costs after net loss in FY2023
Dentsu has released its full year financial results for 2023, reporting a net loss of A$109.5 million (10.7 billion yen) as the Japanese holding company continues on the restructure path.
This was compared to a net profit of A$612 million (59.8 billion yen) in the previous year, with the group looking to further cost cutting efforts in 2024, bolstering operational efficiency with the continued roll out of the One Dentsu model.
Overall, the Japanese holding company brought in a net revenue of A$11.551 billion (1,129 billion yen), up 1.6% year-on-year (YoY).
Japan was the only region in which the group reported positive organic growth, with the region account for 40% of the group’s net revenue.
The APAC region (excluding Japan) only accounted for 10% of net revenue, with organic growth down 8.2% for FY2023.
The region brought in A$1.157 billion (113.2 billion yen) in net revenue for the group over 2023, down 2.8% YoY.
In particular, Australia was named as one of five markets in which organic growth was less than -10%. However, specific figures from the local market were not available.
Dentsu attributed the decline to the challenge conditions of the macro-economic environment, noting lower client spend on larger projects in customer transformation and technology, and falling organic revenue for dentsu Creative due to a slowdown in China.
The group outlined its strategy for turning around results in APAC, with plans to rebuild core business in Australia, as well as China and India.
This is in addition to a revised client strategy, and a comprehensive review of overall cost structure to improve commercial and operational efficiency.
“2023 was a challenging year for the Group, with internal and external headwinds impacting both our organic revenues and profitability. The leadership team and I remain entirely focused on returning the Group to growth this year,” said president and global CEO off dentsu Group Inc., Hiroshi Igarashi.
“As we look forward to 2024, we see some of those headwinds dissipating. We expect to see a return to spend from technology clients – particularly in the US market. However, we will balance this with cycling out of account losses in the first half of 2024, making our 2024 performance second-half weighted.
“Our focus will remain on continued execution of our strategic objectives to return the Group to growth. The implementation of One dentsu will focus on ensuring the right structures are in place to be a client-centric, winning organisation. Progress includes removing internal silos, simplifying practice areas, aligning P&L’s to best serve clients to deliver Integrated Growth Solutions. We will continue to drive profitability through our existing, core business assets.”
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