Dentsu: Net Sales, ORG Report Double-Digit Rise

Dentsu, the Japanese ad agency holding company, reported an 11% jump in net sales for the quarter ended June 30 -- the company’s first fiscal quarter for 2012 -- to nearly $5.7 billion, the firm reported Friday. Net profits climbed more than threefold to $75 million.

The company doesn’t report specific organic growth figures, which exclude the impact of acquisitions, divestitures and currency fluctuations. But a Dentsu rep confirmed that overall, the company’s ORG for the quarter exceeded 10%. That’s the highest so far for holding companies in the ad sector that have reported quarterly results.

IPG and Publicis earlier reported organic growth for the period of less than 2%, while Omnicom Group posted just over 5% ORG for the period. MDC Partners reported growth by that measure of a little more than 8%.

Dentsu said that results were partly helped by Japan’s continuing economic recovery from the effects of last year’s devastating earthquake and tsunami, which sharply curbed GDP output and advertising demand. During this year’s April-to-June period, ad demand “showed a strong upturn” versus the same period a year ago, the company said.

Within the company, strong contributors to growth in the period included Dentsu’s flagship agency in Japan and digital shop Cyber Communications, the rep said. Outside the home country, star performers in the quarter included mcgarrybowen and Innovation Interactive, both part of Dentsu Holdings USA.

During the quarter, mcgarrybowen won the account. That client spends about $30 million a year on ads, according to Kantar Media. Last year, the shop, acquired by Dentsu in 2008, added big assignments from Bud Light, Burger King and others.

Last month, Dentsu agreed to buy London-based Aegis Group, the media focused holding company for nearly $5 billion. That deal is expected to close in the fourth quarter. It had no impact on Dentsu’s just-reported results.

For its full-year fiscal 2012 (which ends March 31, 2013), Dentsu is forecasting a 4% increase in net sales with a dip in net income of around 1%. That forecast does not take into account the pending Aegis acquisition.

The Dentsu rep indicated that the profit drop forecast for this year is due to the one-time gain  the company received during its last fiscal year from the sale of a large chunk of Publicis Groupe stock. That sale was part of the decision by the two holding companies to break up their decade-long strategic alliance.



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