Dentsu Reports Sequential Improvement Throughout Q1

Dentsu reported an expected first quarter organic revenue decline of 2.4% noting a “progressive recovery” during the period with March showing a return to growth of 2.5%.

The company reported an organic decline of 3.5% for its international operation and a dip of 0.9% for operations in Japan.

The organic shortfall in the Americas region was 4.1%, while EMEA fell 2.9% and APAC was down 3.1%.

North America was down 3.8% in Q1 but some operations in the region returned to growth including media services in the U.S. which were up in the mid-single digits. The company cited several reasons for the solid performance including new business wins, additional assignments from existing clients and improved media spending by clients.

Creative services in the region were negatively affected by 2020 client losses and a downturn in events operations, the firm said.

Overall, the company described results in the quarter as “very encouraging” and predicted a return to organic growth for full-year 2021. But given the “macro uncertainty” in a number of major markets the firm said it will hold off providing a specific growth forecast until August.

But the company did say it was confident of returning to growth of 3% to 4% in the “mid-term,” meaning by 2024.

Dentsu CEO Toshihiro Yamamoto said that “consumer and client confidence is returning,” and that despite the uncertainties surrounding exactly how the pandemic will play out “we believe that our momentum will continue to build,” underpinning the firm’s mid-term targets.

Like the other holding companies Dentsu has doubled down on services that many clients have sought over the past year, particularly in the areas of digital transformation, commerce and consumer loyalty.

“We are combining our strengths in consumer intelligence, modern creative, data and technology to deliver top line growth for our clients through integrated growth solutions,” Yamamoto said.

Like its competitors, the company has shored up its balance sheet with an aggressive cost cutting effort that has included layoffs, early retirement programs, the renegotiation of numerous property leases and the sale of some operating and real estate assets. The sale of its Tokyo headquarters building remains under review.

Reported revenue for the first quarter was ¥248,850,000,000 (approximately $2.27 billion), down 1.5%.

 

 

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