Dentsu Group’s H1 underlying operating profit rises 6.6%; India bucks APAC downturn

Japanese advertising and communications major Dentsu Group reported a 6.6% year-on-year increase in underlying operating profit to ¥71.98 billion for the six months ended June 30, 2026, even as organic growth remained muted amid an uncertain global economic environment.

The group’s net revenue rose 3.7% to ¥583.07 billion during the first half of 2026, while revenue increased 4.9% to ¥717.35 billion. Operating margin improved to 12.3% from 12% a year earlier. Underlying net profit attributable to owners of the parent rose 17.9% to ¥38.23 billion.

Dentsu, which is listed on the Prime Market of the Tokyo Stock Exchange, said organic growth in net revenue was just 0.3% during the period. The company attributed the increase in reported net revenue partly to foreign-exchange movements, while cost-control measures, including savings from the rebuilding of its business foundation, helped lift underlying operating profit.

The headline improvement in reported operating profit was substantially sharper. Operating profit came in at ¥83.87 billion, compared with an operating loss of ¥36.55 billion in the year-ago period. Profit attributable to owners of the parent stood at ¥46.28 billion, against a loss of ¥73.65 billion a year earlier.

A key factor behind the swing was a ¥29.63 billion gain on the sale and retirement of non-current assets, while the year-earlier period had included an ¥86.58 billion impairment loss. 

Dentsu’s underlying operating profit excludes such one-off items and M&A-related adjustments, making it the company’s preferred indicator of recurring business performance.

India stands out in APAC

Within Dentsu’s Asia-Pacific operations, India was the standout market, recording organic growth even as the broader APAC region contracted.

APAC reported an organic decline of 3.8% in the first half. Australia, China and Taiwan recorded declines, while India delivered organic growth, according to the company. APAC net revenue nevertheless increased 5.1% year on year to ¥49.55 billion, helped by currency movements.

Despite the improvement, the region remained loss-making at the underlying operating level. Underlying operating loss narrowed to ¥3.21 billion from ¥4.19 billion a year earlier, while the operating margin improved to negative 6.5% from negative 8.9%. Dentsu attributed the improvement partly to SG&A cost controls and savings from its business-foundation rebuilding programme.

The company did not disclose India-specific revenue or profit figures in the financial-results document.

Japan drives group profitability

Japan remained Dentsu’s strongest operating market. The business posted organic growth of 5% in the first half, led by marketing activities spanning internet and television advertising, digital transformation, business transformation, and sports and entertainment.

Japan’s net revenue was ¥235.94 billion, down 0.3% year on year, partly because the previous-year comparison included the results of CARTA HOLDINGS, which was reclassified as an equity-method affiliate in January 2026. Excluding that impact, Dentsu said net revenue exceeded the record first-half level achieved in fiscal 2025.

Underlying operating profit in Japan rose 3.6% to a record ¥60.41 billion for the first half, with the operating margin expanding to 25.6% from 24.6%.

The Americas, meanwhile, remained a drag on group performance. Organic growth declined 5%, with the United States—the region’s primary market—also posting an organic decline. Reported net revenue rose 1.5% to ¥156.13 billion because of currency movements, but underlying operating profit fell 11.8% to ¥29.40 billion. The operating margin contracted to 18.8% from 21.7%.

EMEA delivered a mixed picture. Organic growth declined 0.2%, although the UK, Spain and Poland recorded growth while Germany, Italy and Switzerland declined. Reported net revenue increased 13.7% to ¥137.95 billion, helped by currency movements, while underlying operating profit more than doubled to ¥12.14 billion.

Cost control remains central to turnaround

Dentsu’s first-half results point to continued reliance on cost discipline as it rebuilds its business foundation. The company said SG&A controls and partial realisation of cost savings contributed to the improvement in underlying profitability.

The company incurred ¥12.41 billion in business transformation costs during the first half, compared with ¥4.37 billion in the year-ago period. At the same time, selling, general and administrative expenses increased to ¥523.87 billion from ¥506.82 billion.

Cash generation also strengthened. Net cash flow from operating activities rose to ¥95.12 billion in the first half from ¥36.98 billion a year earlier. Cash and cash equivalents stood at ¥366.36 billion at June 30, compared with ¥295.18 billion at the end of 2025.

Total assets declined to ¥3.07 trillion at the end of June from ¥3.21 trillion at the end of December 2025, while total equity increased to ¥485.73 billion from ¥447.95 billion. Equity attributable to owners of the parent rose to ¥424.61 billion from ¥374.85 billion.

Full-year outlook unchanged

Dentsu retained its full-year 2026 financial forecast. It expects revenue of ¥1.4915 trillion and net revenue of ¥1.2302 trillion for the year ending December 31, 2026. Underlying operating profit is forecast at ¥166.3 billion, with an operating margin target of 13%, while underlying net profit attributable to owners of the parent is projected at ¥78.7 billion.

The company cautioned, however, that the global economic outlook remains uncertain. It cited geopolitical risks, including the situation in the Middle East and the prolonged conflict in Ukraine, as well as elevated resource and energy prices as factors that could affect its consolidated results.

Dentsu’s first-half performance therefore presents a mixed regional picture: Japan and India are showing resilience, EMEA is benefiting from profitability improvements, while the Americas and several APAC markets continue to face organic declines. 

At the group level, stronger recurring profitability and cash generation mark an improvement from the steep impairment-driven loss recorded in the first half of 2025, although the company continues to operate against a backdrop of weak underlying growth and heightened macroeconomic uncertainty.