Dentsu Inc. announces Q3 FY2018 consolidated financial results with organic growth of 4.4%

In the first nine months, India remains a stand out performer boosted by a pick-up in project-based work

Dentsu

In the first nine months, the Dentsu Group delivered total growth of revenue less cost of sales of 8.0 per cent (constant currency basis) and organic growth of 4.4 per cent. The Japan business delivered 4.1 per cent and 4.1 per cent, respectively, in part, due to an increase in digital-related services, favourable results in subsidiaries and new business wins. The international business, Dentsu Aegis Network, delivered 10.8 per cent (constant currency basis) and 4.6 per cent, respectively, partly driven by new business wins in H2 FY2017.

Underlying operating profit declined 4.0 per cent (constant currency basis). In Japan, profit declined due to planned investments in the working environment reforms. At Dentsu Aegis Network, investments in global platforms and systems continue as planned, increasing shared services to enable agency brands to collaborate more effectively. There were no changes to the FY2018 financial guidance announced on August 9, 2018.

Dentsu Aegis Network delivered organic growth of 4.6% in first nine months of FY2018 and 7.0% in Q3 FY2018. The third quarter of FY2018 is the fifth consecutive quarter of improving growth and the best quarterly organic growth figure in two years.

In line with the medium-term direction announced in August, Dentsu Inc. has announced its intention to invest in two listed Japanese mid-sized digital advertising agencies to strengthen its digital capability.

APAC growth:

In the APAC region (excluding Japan), Dentsu Aegis Network reported 2.1% organic growth in the first nine months of FY2018 and 8.2% in Q3 FY2018. The region posted its best quarterly performance in two years, partly due to a turnaround of the China business with spend increasing from Western and Japanese clients. In the first nine months, India remains a stand out performer boosted by a pick-up in project-based work. Elsewhere, Taiwan, Australia and Thailand also saw positive growth.

Toshihiro Yamamoto, President and CEO, Dentsu Inc., said, “In the third quarter of FY2018, Dentsu Group recorded 5.4 per cent organic growth. Dentsu Aegis Network achieved 7.0 per cent organic growth - the fifth consecutive quarter of improving organic growth, and the business in Japan delivered 2.7 per cent. Dentsu Aegis Network has shown strong growth in Q3 FY2018, with September the strongest month in the quarter. The media business continued its strong performance and project-based business continued to improve. We have seen success in FY2018 when we work collaboratively. Increasingly, some of our most successful pitches are those where several of our brands work together to provide a coherent, holistic solution for clients. Growth is becoming broader based with eight of our top 20 markets delivering double digit organic growth.”

He added, “In Japan, we have continued to build and improve our digital services and announced, in October, a plan to invest in two listed mid-sized digital agencies. These investments will bring new skills and enhanced product offerings for our clients. Dentsu will continue to search for investments and alliances in Japan, in line with the mid-term direction announced in August 2018. We continue to generate our own momentum in a challenging market and reiterate the revised FY2018 financial guidance we issued in August.”

Note:
- IFRS 15 “Revenue from Contracts with Customers” is applied from January 1, 2018. 
- The term “Gross profit” is changed to “Revenue less cost of sales” from Q1 FY2018. 

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