Dentsu Q1: 3.7% drop in organic revenue, client wins in India yet to see impact

Media conglomerate Dentsu reported a 3.7% drop in its organic revenue in the first quarter of 2024. The company stated in its official release that the “soft start to the year” was anticipated.  

The Group reiterated FY2024 organic growth guidance of c. 1% and margin guidance of c. 15. It stated that it expects a recovery in organic growth to be “second half weighted”, expressing confidence in new client wins and easing of the existing headwinds faced by Dentsu. 

Japan reported a 2.3% growth in group net revenue in Q1, the Americas saw a decline of 1.4%, EMEA posted a drop of 4.2% and APAC grew 0.6%. Reported net revenue increased 6.3% in The first quarter ended March 31, 2024.

Group underlying operating profit declined 23.6% (cc) yoy to JPY 29.8 bn. Operating margin declined by 310bp to 10.4% (cc). "The fall in operating profit yoy is due to a lower revenue figure, but first quarter operating profit is in line with internal expectations and on track to deliver the FY24 guidance of c. 15%," said the company.

The Group's underlying net profit (attributable to owners of the parent) decreased by 31.1% yoy to JPY 15.8 bn due to the fall in underlying operating profit.

About its India business, the Group stated that significant business wins in the quarter are yet to impact revenues. “India is still impacted by the annualization of client losses in media from Q2 2023,” it said. The company won accounts of Popeyes India, Gemini Edibles and Fats, Welspun, Torren Pharmaceuticals, Gulf Oil and Berger Paints among others in the recent past.  

“In 2024, focus remains on internal investments and returning the Group to growth. The Group continues to accelerate the shift to One dentsu to create a unified global network, further integrating the group's diverse capabilities,” said the company. 

Hiroshi Igarashi, President and Global CEO, Dentsu Group Inc., said: "The first quarter delivered an organic revenue decline of -3.7%, in line with our internal forecasts and leaving us on track to deliver our guidance of c. 1% organic growth for the full year 2024.

"Our confidence comes from a stronger outlook in the second half of the year. The Group will benefit from momentum in client wins, yet to impact revenues, from cycling out of accounts lost in 2023 and a significant easing of comparables.

"We believe the future of our industry is driven by client demands for greater integration of services. Clients are searching for a marketing transformation partner that can deliver true integration of media, dynamic content and data insights via solutions that seamlessly connect brand potential to business impact. This aligns perfectly with our strategy of growing our clients' businesses through integrated growth solutions.

"Our promise to clients is that we are innovating to impact. By simplifying and integrating our offerings into an ecosystem which makes sense to clients, we can continue to push the boundaries of what's possible through experience and business transformation.

"As always, I would like to thank all our employees across the Group for their continued dedication. Together, we look to continue to grow corporate value through our vision of people centred transformation."