Dentsu Group Reports 9.1% Q1 Growth, Upgrades Full-Year Outlook

Dentsu Group reported today that it achieved 9.1% organic revenue growth in the first quarter of 2022.

The company’s Japan operation achieved 10% organic growth (which strips out the impact of M&A and currency fluctuations.)

Dentsu International, which manages operations outside of Japan achieved 8.4% organic growth for the period.

“Dentsu Group has seen a strong start to the year with organic growth ahead of expectations as clients continue to invest in brand experiences informed by data and analytics,” said Hiroshi Igarashi, President and CEO, Dentsu Group.

Wendy Clark, Global CEO, Dentsu International, added, “Our Q1 2022 financial results showed growth across all regions and service Lines.” She asserted that “There continues to be growth opportunity for the year ahead and we are in a strong position to capitalize on that further.” 

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With the solid start to the year, Igarashi said the firm was upgrading full-year organic growth guidance to between 4% and 5% from the previously stated outlook of 4%. The outlook for domestic operations  remains 2 to 3% and while Dentsu International is upgraded to 5% to 6% from the 4 to 5% announced in February. 

The company said it took an approximately $110 million write-down related to exiting its operations in Russia as a result of that country’s invasion of Ukraine. The firm is still in the process of transferring its assets in the country to local entities.

“The situation in Ukraine remains at the forefront of our minds and we continue to support our colleagues in the region with accommodation arrangements, border transfers and legal assistance,” Igarashi said.

Clark added that "The humanitarian impact of the past quarter has been unspeakable. We stand unequivocally with Ukraine and the global community calling for the restoration of peace." She noted that network staffers had made thousands of dollars in personal contributions and that  Dentsu Group has donated "more than $2 million to critical humanitarian aid and refugee relief efforts. These actions are reflective of who we are and what we stand for at Dentsu.” 

The write-down was mostly off set by the sale of real estate assets which Dentsu said added about $90 million to Q1 operating profits.

Net revenue for the period was just over $2 billion, up 16.4%. Net profit was about $185 million, up severalfold compared to the roughly $38 million in Q1 2021 profit.

The Americas was the company’s fastest growing region with organic growth of 13.4%. That region accounts for about a quarter of Dentsu’s total net revenue.

Both the US market and Canada reported 14% organic growth boosted by strong media spend. Dentsu said CXM (consumer experience management), led by Merkle, outperformed expectations in the first quarter and creative delivered mid-single digit organic growth.

EMEA posted 5.3% growth (excluding Russia) and APAC (excluding Japan) had 5.2% growth.

 

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