Dentsu reports a 3.7% fall in organic revenue in Q3; CEO announces new global management structure
Global advertising group Dentsu has released its third-year 2022 financial results revealing a 3.7% fall in organic revenue for the September quarter.
Dentsu Japan Network reported -15.1%, with the third quarter growth rate vs 2019 improving against the second quarter – demonstrating the underlying demand in the Japanese market.
Dentsu International reported 5.4% organic growth, led by continued demand for digital experience and customer-focused transformation services.
In APAC excluding Japan, organic growth slipped (-1.1%), though still up 2.7% on a nine-month basis. The continued impact of the COVID-19 pandemic in China contributed to the third-quarter decline, though Southeast Asia continued to perform well for Dentsu, with Indonesia growing by high single digits. India reported over 10% organic growth driven by new client wins and increased scope from existing media clients.
The Group expects 4 to 5% organic growth for FY2022, with margins expected at 18% excluding Russia.
Dentsu Group Inc. president and CEO, Hiroshi Igarashi, said: “The nine-month results delivered a strong performance across all service areas, despite results impacted by exceptional prior year comparables in Q3 2021. Dentsu Japan Network was flat at the nine-month stage, while Dentsu International delivered 7.6% (ex-Russia) organic growth.
“In Customer Transformation & Technology we continue to establish a winning position at the convergence of advertising, technology & consulting. Revenues from this fast-growing segment now contribute 32.6% to our Group. Our focus remains on raising the value of our service offering to clients towards high-value-added solutions through consulting services.
“We see a multi-year runway of growth as data proliferation accelerates, supported by growth in data channels, a digitally native population and the increased need for corporates to build direct-to-consumer relationships. We help our clients transform their data, technology, and organisational capabilities to deliver differentiated customer experiences, building loyal customers over time.”
Dentsu also announced a globally “diverse and integrated leadership team” to drive its global business forward from FY2023. The global leadership team will ensure further integration of the Group’s diverse capabilities to deliver top-line growth for clients while allowing Dentsu to realise sustainable enhancement of corporate value.
The creation of a new global management structure follows Dentsu’s announced intention to integrate Dentsu International and Dentsu Japan Network into a single Dentsu organisation around the world from 1 January 2023 and will strengthen the voice of the client in all strategy discussions. The simplified structure will allow the business to foster agile decision-making, strategic focus and clarity across the group whilst driving operational excellence across all functions.
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