Dentsu Reports Mixed First Half Results

Tokyo-based Dentsu reported a 10% gain in revenue for the first half of its 2014 fiscal year to 295,674 million yen, or about $2.6 billion at today’s exchange rate. Net income for the period was down 72%, partly due to the strong performance by acquired companies that triggered increases in deferred consideration.

Dentsu did not identify the companies, but in recent years, it has acquired Aegis Group, mcgarrybowen and 360i, among others. The company said the depreciation of the yen also hurt profits.

Dentsu also said that subsidiaries operating outside Japan, organized under the Dentsu Aegis Network, posted organic growth of 9%. By region, Europe, the Middle East and Africa (EMEA) were up 8.6%; the Americas was up 4.9%, and Asia-Pacific was up 15.1%.

By business segment, advertising revenue was up 10.5%, while profits for the segment were down nearly 27%.

Information services revenue was down nearly 4%, although profits were up nearly 11% for the division.

Other businesses combined reported an 8% drop in revenue with profits down 13.6%.

The company also revised upward its forecast for the full 2014 fiscal year (which ends March 31, 2015). The firm now expects a 9.2% gain in revenue and a 10% decline in net income attributable to the parent company.

Separately, Dentsu said it would adopt the International Financial Reporting Standards in place of Japanese accounting standards for reporting financial results. The new standard will be used to report full-year 2014 results next year and in subsequent reporting periods.

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