Dentsu Revises Ad Outlook: 3.6% Gain

Small-Arrow-up-onMoneyLike many of its Western counterparts, Tokyo-based agency holding company Dentsu said in its earnings statement released today that it is seeing weakening demand for advertising in the second half of its current fiscal year, which ends March 31, 2013.

The year started on a positive note, the company stated, reporting that its first fiscal quarter showed a strong upturn in advertising demand as the Japanese economy continued to recover from the devastating effects of last year’s earthquake and tsunami. That demand helped boost the company’s first-half revenue to $11.5 billion, a gain of nearly 7% versus the prior-year first-half period. Net income was up nearly 17% to $117.4 million.

That said, the company noted that “against the background of increasing uncertainty about the future of the global economy, advertising demand started to slow in the summer.”

As a result of the slackening demand, Dentsu said it has revised slightly downward its full-year fiscal 2012 outlook, and now predicts a 3.6% revenue gain to approximately $24.6 billion with net income of about $353 million, down about 5%.

The company confirmed that its agreement to acquire London-based marketing services firm Aegis Group will not close by the end of 2012, as initially anticipated. The company now believes the deal will close by February 2013.

The push-back of the closing date is partly due to a delay in getting antitrust approval from China. A Dentsu rep confirmed last week that all other antitrust clearances have been obtained, including approvals from the U.S., UK, Canada, Russia and several others.

There has been speculation that China may be playing politics with the approval process, in light of a territorial dispute between the two countries over several islands in the East China Sea.

But Dentsu issued a statement Tuesday declaring that the company and Aegis “remain in constructive dialog with” the Chinese regulatory body authorized to grant approval of the deal. “Dentsu and Aegis remain confident that the scheme will become effective on or prior to 28 February 2013.” If the deal is not completed by then, either party can terminate the transaction without incurring a penalty.

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