Dentsu’s APAC region was down by 6.6 per cent in the second quarter and is “expected to continue facing challenges”, particularly in creative and customer experience.
It’s unclear how this will impact the Australian market, but APAC was the worst performing region with the Americas also down 5.1 per cent and EMEA down by 0.9 per cent.
Dentsu Japan, which accounts for 40 per cent of revenue, achieved “record-high net revenue and underlying operating profit”, growing by more than 5 per cent for the third consecutive quarter. Globally, Dentsu’s organic growth was up by 0.2 per cent, but that is largely due to the heavy lifting of its Japanese business.
Flat growth in this quarter is still an improvement on Dentus’s previous five quarters in which declines between 1.6 per cent to 6.6 per cent have been booked.
Nonetheless, Dentsu president and global chief executive Hiroshi Igarashi said that it was going ahead with a further round of cost cutting to its international markets.
“[The] international business continued to experience negative growth in all three regions, resulting in an extremely challenging performance. For the second half, while the Japan business is expected to maintain its growth, the three international regions are expected to continue facing challenges” he said.
“While the Media business remains relatively stable with new business wins, the CXM business is recovering more slowly than previously anticipated with continued challenging business environment, and the Creative business continues to face a tough performance due to losses in some ongoing projects, mainly caused by shifts in the client’s marketing approach.
“Regarding the rebuilding of the business foundation, we have identified initiatives that are steadily progressing toward achieving annual operating cost reductions of approximately ¥52 billion ($541.5 million) for 2027, compared to a target budget of approximately 50 billion yen,” he said.
“We have already identified all necessary measures, including the headcount reduction of approximately 8 per cent (approximately 3,400 people) in the international business”.
Igarashi said that the holding company is focused on investing in “key data & technology programs” and “proprietary AI solutions” to enhance the business. There is also a commitment to expand its sport and entertainment offerings and connecting regional hubs in Japan, the United States, the United Kingdom, Asia and the Middle East/North Africa to form “a single global network”.
In Australia, Dentsu’s agencies include Dentsu Creative, Carat, iProspect and Dentsu X.The group has made redundancies in the past two years, particularly within its CX business Merkle.
This month, Dentsu ANZ boss Patricio DeMatteis stepped down and has been succeeded by Rob Harvey.
