Dentsu results: Australian restructuring imminent to mitigate further loss

Josh McDonnell
By Josh McDonnell | 18 February 2019

The Australian market has been identified as one of the underperforming markets for Dentsu, with the impacts of lower client spend and changing management contributing to its 2018 financial year results.

Following growth in the third quarter, Australia saw a sharp pullback in the fourth quarter resulting in negative growth for the full year.

Challenging client spend and the loss of key accounts, including confectionery giant Mondelēz impacted the business.

Dentsu stated that new management, led by the recently appointed ANZ CEO Henry Tajer, is developing a relevant, local strategy for the Australian market and will restructure the business accordingly.

"Following growth in the third quarter, Australia saw a sharp pullback in the fourth quarter resulting in negative growth for the full year. Challenging client spend and the loss of some accounts impacted the business," a statement from its results explained.

"New management is developing a relevant, local strategy for the Australian market and will restructure the business accordingly.

"The rest of the region reported strong growth highlighting the continued diversification of the revenue footprint across the region."

News of restructuring within the Dentsu Aegis Network (DAN) locally will come as no surprise following the announcement earlier this year that the leadership and agency structure for the APAC region would be reshuffled to mitigate financial loss within the business.

In the APAC region (excluding Japan), DAN reported -1.7% organic growth in FY2018 and -9.6% in Q4 FY2018.

According to the business, a strong organic revenue performance across the remainder of the group resulted in a return to incentives to reward and retain its "key talent".

A sharp slowdown late in the year in the APAC region impacted full-year group profitability, however in In FY2018, the Dentsu Group delivered total growth of revenue, less cost of sales, of 6.8% and organic growth of 3.4%.

Despite the slowed growth in the Australian market and broader APAC market, Toshihiro Yamamoto, President and CEO of Dentsu heralded 2019 as a new stage for the Dentsu Group, one focused on transformation for the business.

"Our continued focus on people-driven marketing and the differentiation of our client offer through innovation, technology, data and analytics will drive our success," he said.

"Through our strong client offering and the extraordinary talent throughout the organisation, I remain convinced we are well positioned to remain leaders in our industry and will conquer any and all possible disruptions going forward."

Over the past 12-months, DAN ANZ has seen a raft of its top leadership exit the business, including the departure of former CEO Simon Ryan, who joined carsales late last year, Paul Brooks exiting Carat to join Nine and Travis Day stepping down as MD for Vizeum.

Previously speaking with AdNews, Tajer said he wants DAN to be perceived as more than just a media group as he examines its structure going forward. Tajer starts in the CEO role from today.

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