Dentsu reported slower than expected business recovery and downgraded its full year revenue forecast as the Japan-based global advertising group continues restructuring.
Organic growth was just 0.3% for the September quarter.
Both Japan and EMEA performed well but APAC, and particularly the business in Australia, faced “difficult” market conditions.
Dentsu was now expecting full year organic growth of 0%, down from the previous forecast of 1%.
The company said the One dentsu strategy was driving the improvement in client wins as the group operated as a unified global network, leading to "notable" global client wins.
In the September quarter, net revenue was up 2% to JPY 284.5 billion. Group underlying operating profit fell 8.8% to JPY 34.2 billion.
The company was well behind its market leading peers. Publicis Groupe posted 5.8% organic growth and Omnicom 6.5% in the September quarter.
Dentsu reported organic revenue up 2.8% in Japan, with continued recovery in internet advertising which saw double-digit growth, according to the company’s market update.
The Americas was down 3.1% but has seen sequential quarterly improvements. However, recovery of the CXM business has been slower than expected with reduced client spend.
EMEA was up 6.9% with significant easing of comparables and a stronger than expected media performance in some local markets.
APAC, down 11.6%, was also challenged with CXM and continues to focus on fundamental recovery within the region.
Australia had “declining local client spends” and growth was marked at less than -10%.
CEO Hiroshi Igarashi said the company, pursuing a One dentsu strategy, continued to see sequential quarterly improvement.
“We have seen notable global new wins in the quarter, higher pitch win rates in Japan and the steady accumulation of net wins in the media business in international markets, which is the result of our continued effort to deliver Integrated Growth Solutions.
“These are examples that prove the implementation of One dentsu is affecting positive changes.
“However, business recovery has been slower than expected mainly in CXM where we have seen challenges of reduced client spend, especially in the international markets.
“Over the last nine months, we have made internal investments around data & technology, people & culture and business operations to accelerate our competitiveness.
“We are confident in our medium-term direction and prospects of the group, and these internal investments will strengthen our capabilities to deliver Integrated growth Solutions and restore our competitive advantage to return to organic growth.”
September quarter 2024:
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