Matthew Miller
May 16, 2021

Dentsu organic revenue declines 2.4% in 'encouraging' start to the year

Organic revenue fell 0.9% in Japan and 3.5% internationally in the first quarter, but overall underlying profit grew 20.8% as margins improved

Dentsu organic revenue declines 2.4% in 'encouraging' start to the year

Dentsu Group has reported what it calls a "very encouraging start to the year", with organic revenue declining 2.4% in the first quarter on a year-on-year basis (-0.9% for Dentsu Japan Network and -3.5% for Dentsu International).  

The company reported a 1.8% decline in total revenue less cost of sales (LCOS) on a constant-currency basis (0.0% for Japan and -3.1% for Dentsu International). Topline revenue was 248.9 billion yen ($2.28 billion).

The Americas performed worst in organic growth, followed by APAC (excluding Japan), EMEA, and then Japan.

Internationally, none of Dentsu's service lines managed organic growth, with creative the worst performer. Both the media and CXM lines managed revenue increases on an LCOS basis.

Underlying operating profit increased 20.8% YOY to 44.9 billion yen ($411 million), as underlying operating margins improved by 20.2%. This breaks down to a 12.1% increase to 33.9 billion yen ($310 million) for Dentsu's Japan operations, where operating margin was 32.8%, and a 41.8% increase to 12.2 billion yen ($112 million) for Dentsu International, where margin was 10.3%.

"Our first quarter results showed a continued progressive improvement in our organic performance despite the pre-COVID-19 comparators facing the Group for most of the quarter," Toshihiro Yamamoto, president and CEO of Dentsu Group, said in a release. "Consumer and client confidence is returning, and this is reflected in the positive momentum in our revenue growth. Profit has been particularly strong, demonstrating our relentless focus on costs and commitment to growing our margins."

He added that strong progress has been made against the objectives in Dentsu's comprehensive review to accelerate its transformation. "We are tracking ahead of many of our internal targets and demonstrating that we are prepared to take unprecedented action to transform our service to clients and give returns to shareholders," he said. "This includes radical rationalisation of brands and divestment of assets."

The company said it remains on track for its mid-term targets (through 2024).

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