Dentsu reported a 10.1% gain in gross profit (defined as revenue less direct costs) in its FY 2014 to 676.9 billon Japanese yen (about $5.68 billion at today’s exchange rates). Net profit was up 10% to 92.875 billion yen (about $780 million).
The company reported organic gross profit growth of 5.8%. By comparison, Interpublic reported 5.5% organic revenue growth for last year, while Omnicom posted a gain of 5.7%. Publicis had 2% growth.
Dentsu reported that just over half (50.7%) of its gross profit was generated outside Japan. It was the first time that the company’s international business surpassed the 50% gross-profit threshold, for the most part due to its acquisition of Aegis Media. Last year was the first full year since the completion of the Aegis acquisition in 2013.
Dentsu Aegis Network, the unit that oversees the company’s business outside of Japan, posted organic growth of 10.3%.The organic growth rate for Dentsu operations in Japan was 2.2%.
Tadashi Ishii, president and CEO, Dentsu Inc., said the company outperformed the industry’s organic growth rate for 2014, which he pegged at 4.6%.
“Supported by the confidence we have in our strategic direction and the high quality of the talent we have across the Group, we expect to continue outperforming the market in the future.”
The company has several areas of focus, which include continuing to diversify its portfolio of agencies and services globally with a goal of generating 55% of its gross profit from outside Japan by 2017. It is also focused on expanding its digital service offerings, strengthening the core Japan offering and “re-engineering business processes and improving profitability.”
In the Americas region, Dentsu Aegis Network delivered organic growth of 7.9% in 2014. In the Asia-Pacific region, excluding Japan, organic growth was 14.4%. The comparable figure for the Europe, Middle East and Africa region was 9.7%.
Looking ahead, Dentsu said it is forecasting gross profit growth of 8.6% in 2015.