Dentsu to slash up to 160 overseas entities, cut global HQ costs 30% by FY2028

Dentsu is set to significantly shrink its international corporate footprint over the next two years, as the Japanese advertising and marketing group steps up a restructuring programme aimed at eliminating loss-making operations, reducing overheads and concentrating resources on markets where it sees stronger growth potential.

The company plans to cut 70-80 international entities in FY2026 and is considering a further reduction of 50-80 entities by FY2028. This follows a major rationalisation already undertaken by Dentsu: the number of international entities was halved between January 2021 and January 2026, from more than 1,000.

The latest restructuring is part of Dentsu's updated Mid-Term Management Plan for FY2026-FY2028, under which restoring profitability and improving financial soundness have been identified as the company's highest priorities.

The group is also targeting a roughly 30% reduction in Global HQ costs by FY2028, compared with its FY2026 plan. Importantly, Dentsu plans to redirect part of those savings towards investments in AI and Data & Technology, effectively using the restructuring to shift spending from corporate overheads towards areas it believes can drive future growth.

Loss-making markets face deeper scrutiny

Dentsu's restructuring goes beyond simply reducing the number of legal entities. The company said it will review underperforming businesses, assess restructuring and exit costs for unprofitable markets and prioritise reforms regardless of the amount of capital already invested in those operations.

The stated objective is to ensure that by FY2027 no markets in the company's defined significant-investment category are operating at a loss. By FY2028, Dentsu expects all four of its regions — Japan, Americas, EMEA and APAC — to contribute to increasing shareholder value.

Dentsu's definition of the relevant markets is significant: it refers to markets that had received more than JPY 10 billion in cumulative investment as of February 2025.

The company has already seen some progress. China and Australia achieved profitability on an underlying operating profit basis in FY2025. However, Dentsu said macroeconomic uncertainty means some markets are still expected to remain loss-making during FY2026, making the restructuring and portfolio review a key part of its strategy for the next two years.

From a global network to a more selective footprint

The planned entity reductions point to a broader shift in Dentsu's global operating model.

The company has acknowledged that its previous structure was characterised by complex operations and fragmented investment across markets and capabilities, while organic growth remained below market growth. Its updated strategy calls for simplifying the organisation, optimising the business portfolio and rebuilding its financial foundation.

Dentsu now intends to focus management resources on markets with sufficient scale, sustainable growth potential and a clear competitive advantage.

The company describes this as focusing on areas where it has a “right to win”. Examples cited in the plan include B2B and technology in the US and UK, accelerating growth in Japan and restoring growth in priority APAC markets.

The approach also means that existing capital investment will not necessarily protect underperforming operations. Dentsu has explicitly said it will assess restructuring and exit costs and prioritise reforms regardless of invested capital, signalling a greater willingness to reshape or exit businesses that do not fit its future strategy.

Cost savings to fund AI push

The restructuring is not being positioned purely as a cost-cutting programme.

Dentsu said it plans to allocate a portion of Global HQ cost savings to AI and Data & Technology investment. The company has already invested JPY 3.7 billion internally in Media, AI and Data & Technology during the first half of 2026.

AI is expected to become embedded across Dentsu's operating model, from planning and decision-making to content activation and project management. The company also plans to adopt agentic workflows and develop proprietary AI solutions and data products.

The strategy therefore reflects a reallocation of resources: reducing the complexity and cost of Dentsu's international organisation while directing more capital towards technologies and capabilities that management sees as strategic growth drivers.

More than JPY 50 billion in operating cost savings

The entity rationalisation and headquarters cuts form part of a broader cost-reduction programme.

Dentsu expects more than JPY 50 billion in operating cost reductions by FY2027, ahead of the JPY 35-50 billion target outlined in its earlier mid-term plan.

The company said the reduction in international entities is already part of a structural transformation that includes the partial divestment of its ANZ CXM business and continued efforts to simplify its global organisation.

The company is also targeting higher productivity per employee, with AI and Data & Technology investment expected to support sustained productivity gains through what Dentsu describes as an AI-native operating model.

Four regions, four different roles

Dentsu's restructuring is accompanied by a more differentiated strategy for its four regions.

Japan will remain the “Group Core”, with the company seeking to strengthen its largest profit base and create new value across clients' entire value chains.

The Americas will be the “Growth Engine”, with Dentsu seeking to scale its client base through Media and AI transformation.

EMEA has been designated the “Turnaround Focus”, reflecting the need to restore market share and profitability through integrated Media-led solutions and a simplified operating model.

APAC is being positioned as the “Next Growth Base”, with the company looking to improve competitiveness and profitability through focused investment and cross-market collaboration.

This regional segmentation suggests that Dentsu is moving away from a uniform global strategy towards a portfolio approach in which capital, management attention and capabilities are allocated according to the prospects and competitive position of individual markets.

FY2027 becomes the key restructuring milestone

The next 12-18 months will therefore be critical for Dentsu's turnaround.

By FY2027, the company wants to have completed enough restructuring to ensure that its significant-investment markets are no longer loss-making, while achieving more than JPY 50 billion in operating cost reductions.

By FY2028, the ambition is broader: a 16% operating margin, 2-3% organic growth, a roughly 30% reduction in Global HQ costs and all four regions contributing to shareholder value.

The restructuring ultimately represents a shift in Dentsu's priorities from maintaining the scale of its global footprint to improving the quality and profitability of that footprint.

With up to 160 additional international entities potentially removed by FY2028, the company is seeking to build a smaller, more focused organisation in which savings from a reduced corporate structure can be redeployed into AI, data, technology and other priority growth areas.

Dentsu's updated plan makes clear that the group is prepared to take restructuring and exit decisions even where substantial capital has already been committed, as it attempts to create what it describes as a stronger business foundation for sustainable growth beyond 2028.