Dentsu, expecting no more than 1% organic growth this year, has a new plan to lift its game in an increasingly competitive market.
And the focus is on its under performing international business, including APAC, and in building the media business.
This replaces the previous plan, running 2021-2024, whose growth and profitability targets “have not been achieved”.
The company has allocated 50 billion Yen (AUD520 million) this financial year 2025 for rebuilding.
Dentsu says the organsation has become more complex and siloed, with high cost structures.
And the results of recent acquisitions tend to be below expectations due to unrealised synergies.
CEO Hiroshi Igarashi delivered the new deal at the same time as announcing full year 2024 results.
Dentsu closed the year with organic revenue growth flat at –0.1%.
December quarter revenue in Japan came in ahead of expectations with 8.4% growth.
The Americas fell 2.9%, EMEA was up 3.5% and APAC down 3.9%.
In a competitive environment, dentsu’s focus is to deploy over the next three years capital and talents to regain competitiveness, return to a strong growth trajectory.
“In 2025, the first year of the new Mid-Term Management Plan, dentsu will focus on restoring profitability and competitiveness in its International business (Americas, EMEA, and APAC) through the reevaluation of underperforming businesses globally as well as by rebuilding the business foundation.”
The plan is to give priority to Japan and the US, where dentsu has a large revenue base with an abundance of business assets.
And on other markets where dentsu already has a strong position.
The three year plan targets:
1. Organic growth: 4%
2. Operating margin: 16%-17%
3. Operating cash flow for the year: 140 billion yen
4. ROE: mid-teens range
“Dentsu’s vision remains ‘to be at the forefront of people-centered transformations that shape society’,” said Igarashi .
“Through this Mid-Term Management Plan, dentsu will boldly promote the necessary changes and reforms to once again achieve strong organic growth, and will realise this vision.
“By achieving the goals of this Mid-Term Management Plan as ‘One dentsu,’ we will enhance our corporate value and realize sustainable development for society, our clients and our employees.”
The new plan targets large and medium-sized clients in each market and to strengthen the client management team.
In the International business, dentsu will focus on improving the added value of the media business.
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