Dentsu reports 13.2% revenue decline in Q4 due to COVID impact
The Group also announced a share buyback of JPY 30.0 bn
Dentsu reported an annual operating loss of £960m in the fourth quarter. Revenue declined 13.2% in the quarter due to COVID impact. "FY2020 organic revenue performance was ahead of guidance, with the fourth quarter ahead of expectations. FY2020 underlying operating margin was broadly maintained, demonstrating swift cost action throughout the year, mitigating top-line decline. Significant progress has been made against the Comprehensive Review to accelerate the Group’s transformation," read the press release announcing the financial results for the full year ended December 31, 2020.
The Group also announced a share buyback of JPY 30.0 bn.
Total revenue less cost of sales (LCoS) declined -9.8% (constant currency). Although organic revenue declined -11.1%, the company reported that it was ahead of guidance with progressive quarterly improvement in organic revenues from Q2 FY2020 onwards.
In FY2020, the company's organic revenue declined -8.4% and Dentsu International organic revenue declined -13.0%, due to the global impact of the pandemic.
"Group underlying operating margin stabilized at 14.8%, -20 bps yoy as cost savings offset the revenue decline. Previously announced restructuring costs arising from the Comprehensive Review totalled JPY 78.3 bn and an impairment loss, reflecting the downturn caused by the pandemic, was JPY 144.7 bn. This led to a statutory operating loss of JPY 140.6 bn," reported the company.
In the next few years, the group aspires to progressively raise the dividend payout ratio to 35% of underlying basic EPS under its renewed dividend policy in the Mid-Term Management Plan, announced yesterday.
Dentsu's short-term outlook depends on the variable macro outlook and the progress of the pandemic, which has placed restrictions across its many markets, espcially in the EMEA and the Americas.
It reiterated that a greater clarity on the markets will be needed before earnings and further dividend guidance can be meaningfully resumed for FY2021.
