Dentsu flagged more restructuring as the Japan-based global advertising group reported further falls in organic growth.
The December quarter came in at -6.6% and the full year at -4.9%.
The company is aiming to nudge its fiscal nose above the line in 2024, expecting organic growth of about 1%.
For 2023, the business in Japan was the only area to report growth: Japan 1.6% in organic revenue; the Americas a fall of 7.2%; EMEA down 10.8%; and APAC a decline of 8.2%.
Over the full year to December, group underlying operating profit fell 20% to JPY 163.5 billion (AUD1.67 billion).
The company is well behind most of its global peers. IPG posted a better than expected rise in organic growth of 1.7% for the December quarter, Omnicom reported 4.4% and Publicis Groupe posted 6.3% for the full year to December.
Dentsu is taking a hard look at its costs, especially in APAC and including the Australia and New Zealand business.
“2023 was a challenging year for the group, with internal and external headwinds impacting both our organic revenues and profitability,” says CEO 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 One dentsu program, providing a single point of contact for clients globally, continues to work on the company’s structure, removing internal silos, simplifying practice areas, aligning P&L’s to best serve clients to deliver Integrated Growth Solutions.
Dentsu’s Customer Transformation & Technology division in 2023 represented 32% of group net revenue in the year to December. Dentsu wants to make that 50%.
“We will continue to drive profitability through our existing, core business assets,” says Igarashi.
“Our differentiated position at the convergence of marketing, technology and consulting enables collaboration to deliver client solutions that transform our clients’ businesses.
“Our expertise allows our clients to re-imagine their customer experience to ensure they meet their consumers wherever and however they choose to engage with brands.”
Organic revenue fell 8.6% in APAC, representing 10% of dentsu, in the December quarter,
The region was the subject of a “strategic review” of its cost base.
The Australian and New Zealand business was impacted by economic uncertainty, increased competition, lower client spend and account losses continue to impact the business.
Key media client retention provided “some stability” in the market.
Dentsu says the Australian gaming business, SMG Studios, continued to show positive momentum with full year growth.
For the APAC region as a whole, dentsu has a “soft” outlook for 2024 and beyond due to a “challenging” business environment.
Dentsu recognised a 53.1 billion yen (AUD542 million) of impairment loss on goodwill and intangible assets in the region.
2023 numbers for the group:
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