Dentsu reported negative organic growth and weaker profits for the March quarter as its business in the US and Asia went on a slide.
The Japan-based global advertising group is now forecasting organic growth of 1%-2% for the full year, down from 4% previously.
In the March quarter, net revenue was up 4.5% to JPY 269.6 billion (AUD2.96 billion) compared to the same three months in 2022 but organic revenue fell 1.6%.
Group underlying operating profit fell 33.2% to JPY 37.9 billion.
Japan organic revenue fell 0.2%, the Americas dropped 4.9%, EMEA was positive a 3.4% and APAC (excluding Japan) fell 7.8%.
Other global holding groups are reporting stronger growth. Omnicom posted 5.2% growth in the March quarter, WPP reported a 2.9% rise in net sales and Publicis Groupe came in with superior organic growth of 7.1%.
Dentsu CEO Hiroshi Igarashi says the results were impacted by a lengthening of the sales cycle for customer transformation & technology contracts in the US.
“A growing pipeline and increase in new business wins in the first quarter provides greater visibility for an improvement in second half growth,” he says.
“Our strategy of growing revenues in the fast growth market of Customer Transformation & Technology is progressing well, with 35% of net revenues generated by CT&T in the first quarter.
“Our services empower our clients to transform their data, technology, and organisational capabilities to deliver differentiated customer experiences that drive growth.
“We remain clear that the future of our industry is greater convergence and integration of services.”
Dentsu's March quarter 2023:
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