Dentsu profit takes a hit as revenue dips and costs blow up in Q2

Japanese advertising holding company Dentsu has introduced cost management measures for the 2023 calendar year, as its quarterly profit took a hit from waning revenue and rising costs.

According to the company’s latest earnings for the second quarter ended 30 June, its net revenue was ¥258.8 billion (A$2.74 billion), a decline from ¥259.2 billion (A$2.75 billion) in the previous corresponding period.

However, the underlying operating profit saw a 37.6% decline year-on-year (YoY), from ¥35.9 billion (A$380.27 million) in 2022 to ¥22.4 billion (A$237.3 million) in 2023.

The group reported an organic revenue decline of 4.7%, while APAC (excluding Japan) posted a 7% decline. Meanwhile, Australia also posted a greater than 5% decline.

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Dentsu Australia and New Zealand’s current leadership team are all around 18 months or less into the job.

These include Patricio De Matteis (CEO ANZ from January 2023), Kirsty Muddle (CEO of Dentsu Creative from February 2022), Danny Bass (CEO of Dentsu’s media from August 2022), Steve Yurisich (CEO of Merkle from March 2023) and Chris Bower (CEO of Dentsu Solutions from March 2022).

Under the leadership of Dentsu’s previous ANZ CEO, Angela Tangas (who has taken up a UK-based role in May 2022), the ANZ business saw three years of continued revenue and margin growth.

Hiroshi Igarashi, president and CEO of Dentsu Group said: “We expect to see an improving trend in organic growth in the second half with our focus on delivering growth and measurable business results for our clients.

“Client pitches require ever-closer integration of our services and by accelerating our One dentsu philosophy and mindset we will encourage the collaboration required amongst our people to anticipate and exceed our clients’ expectations.

“The collective strength of our 72,000 employees brings dentsu its unique culture. Our ability to generate new ideas and innovate, by bringing together expertise and fostering creativity enables us to deliver integrated solutions that grow our clients’ businesses.”

Dentsu has downgraded its financial guidance for 2023 to the following:

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