Dentsu Q2 results reveal Australia leads way for APAC region
Dentsu Group today released its Q2 2022 results to the Tokyo Stock Exchange. For dentsu international, excluding Russia, that saw continued performance of 8.4% revenue growth and 13.6% operating margin.
Dentsu Group reported a strong second quarter with organic growth of 8.2%. Australia’s performance surpassed many other APAC markets in the June quarter, with the Japan-based global advertising group reporting Australia’s H1 organic growth at 8%, ahead of the APAC region’s 4.8% (excluding Japan, which reported growth of 7.9%).
Operating margin growth increased to 13.9%, supported by continued organizational simplification and cost efforts the Group has been undertaking over the past two years.
Dentsu’s largest 20 clients grew 12% in the quarter, in addition to the Dentsu Health initiative, which was launched last year, becoming a top 5 health and wellness network globally.
The network’s Customer Transformation & Technology division grew 22.25%, powering overall gains for a second straight quarter.
The growth area of Customer Transformation & Technology has been pinned by the Group as a resilient and stable revenue fixture going into H2.
The APAC region saw strong growth from a number of markets including Australia, India, Korea, and Singapore.
Australia’s Q2 organic growth was bolstered by a strengthened focus on the Group’s Gaming business, supported by favourable growth in CXM and Media with strong pipeline conversion.
The CXM Service Line in the YTD reported growth of +13.6%, with double-digit organic growth across all three global regions.
Hiroshi Igarashi, President and CEO, Dentsu Group Inc., said: “Our strategy of growing our revenues in the fast growth area of our industry, Customer Transformation & Technology, brings a number of benefits to the Group – transforming our client offer, our revenue profile and our cost structure. We retain our ambition of generating 50% of our net revenues from this structural growth area as we shift our business to a hybrid agency/consultancy.”
Commenting on the foreseeable future of Dentsu’s performance, Igarashi said: “Whilst the macro-outlook may remain uncertain, we enter the second half of the year with confidence. Our improved revenue mix, our deep client relationships, strong balance sheet underpinned by the transformation the Group has undertaken over the past two years positions us well for the future.”
The robust H1 FY2022 performance has led the group to form a guidance to the upper end of 4 to 5% organic growth with 17.7% operating margin, despite the dilutive impact of Russia on operating margins.
The Group reported in its earnings that it “retains confidence in the medium-term targets of 4 to 5% Group organic growth, 18.0% Group margins with a pay-out ratio reaching 35.0% by FY2024.”
The Dentsu share price currently sits at 4,845 JPY, with a market capitalisation of 1.4T.
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