Dentsu Group Inc. is the latest ad marketing holding company to report a
revenue decline for the second quarter while downgrading expected results for the full year.
The company reported an organic net revenue decline of 4.7% for Q2, citing client struggles in the
technology and financial sectors as well strong prior year comparables.
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The company is now forecasting flat performance at best for the full year 2023 and up to a 2% decline in organic revenue.
The company started the year projecting 4% organic growth for 2023 but reduced that figure to between 1% and 2% at the end of the first quarter.
Company shares were down 3% on news of the earnings
performance in Monday trading.
On a positive note, the firm indicated that Q2 is expected to be the “trough” for this year’s organic revenue decline, with some
pickup in the second half of the year, partly as a result of one-off events like the Rugby World Cup and easing comparables.
Japan was the only region to post organic growth through the first half --
+1.4%, with 3.4% growth in the second quarter.
The Americas region was down 7.4% in the second quarter and down 6.2% for the first half. APAC and EMEA were down 7.4% and 5.2%, respectively, for
the first half.
Dentsu said both its media and customer transformation and technology practices in the Americas region reported weaker results due to reduced
client spending and year-ago comparables. The consumer goods client sector was a relative bright spot, the firm noted.
Creative in the Americas was up 0.5% in the first half due to expanding client
remits and new business, the firm said, noting that in June Michael Komasinski succeeded Jacki Kelley as CEO for the region.
“Our second quarter performance reflects the continued impact of the
slowdown in spend from clients in the technology and finance sectors,” stated Hiroshi Igarashi, President and CEO, Dentsu Group Inc. “We expect to see an improving trend in organic growth
in the second half with our focus on delivering growth and measurable business results for our clients.”
The Dentsu chief added, “As we look forward, we are confident in our
positioning at the convergence of marketing, technology and consulting. Client pitches require ever-closer integration of our services and by accelerating our One dentsu philosophy and mindset we will
encourage the collaboration required amongst our people to anticipate and exceed our clients’ expectations.”