Dentsu’s APAC organic revenues, which includes all regional markets outside of Japan, declined by 7 per cent in 2024, with a “decrease in local client spend“ in Australia and China noted.
Globally, the holding company reported a 5.7 per cent net revenue rise to ¥1,194 billion (A$12.35 billion) for the year. Net organic revenue was flat.
Dentsu booked a net operating loss of ¥192.2 billion, which included large impairment losses of goodwill of ¥210.1 billion, primarily in the US and EMEA regions.
In announcing the results, Dentsu global president and CEO Hiroshi Igarashiu said the group’s FY24 results were broadly in line with November guidance. Its Japan office led the charge, with revenue up 4 per cent, while EMEA was up 2.2 per cent and America was down 4.1 per cent.
“We saw sequential quarterly improvement throughout the year, with strong performance in Japan. There were also some notable global new wins in the International business,” he said.
“However, we have reported a significant goodwill impairment in the fourth quarter, reflecting a more conservative outlook in EMEA and the Americas. We believe that recognition of these uncertainties will contribute to a sounder balance sheet and a stronger platform upon which to implement the Mid-Term Management Plan announced today.”
Dentsu shared further details of its new recovery plan that is due to run until FY27.
It has touted one-off restructuring costs of ¥50 billion (A$516 million) to optimise its headcount in its non-Japan businesses. There will be an additional internal investment of ¥45 billion.
Its business strategy includes a focus on Japan and the United States, its two largest markets, and other markets “where we already have a strong position”.
There will also be a focus on improving the added value of its media business, while scaling back poorer performing parts such as CMX.
In 2027, Dentsu plans for organic growth of 4.0 per cent, an operating margin of 16-17 per cent, and operating cash flow of ¥140 billion.
In the past 18 months, Dentsu’s Australian operations have already undergone rounds of redundancies to poorer performing parts of the business.
Last August, its CMX business Merkle slashed 50 roles in Australia with reports of dozens more being made redundant earlier in the year as clients put on ice larger scale projects for short-term wins.
Merkle’s leader Kim Douglas left the business after only five months. Lat last year, Dentsu CEO of practices and products, Kirsty Muddle, and Merkle chief commercial officer, Paul Whittaker told B&T Merkle has a plan in place to revitalise its CMX business, and how it can work more closes with Dentsu’s media and creative arms.
