Dentsu posts a profit despite COVID-19 revenue fall

Chris Pash
By Chris Pash | 14 August 2020
  • Dentsu Group first half underlying operating profit 52.7 billion yen, up 14.6%.
  • Organic revenue down almost 9%.
  • Dentsu Aegis Network organic revenue down 12%. Second quarter revenue dropped 20%.

Dentsu Group posted a profit for the first half with the Japan-based global advertising group slashing costs to meet falling revenue from COVID-19. 

Organic revenue for the six months to June was down 8.9% but underlying operating profit was up by 14.6% to 52.7 billion yen.

The revenue slide was more than offset by cost savings, including reducing wages and bonuses, to mitigate the impact of the economic downturn.

Dentsu believes that it must plan for the downturn to continue, but at a reduced rate, in the second half of this year, with a gentle recovery expected in 2021. 

The company has launched a comprehensive review of its business and an accelerated transformation plan into faster growth areas, such as digital solutions and CRM.

"This review, across all regions, will support the focused strategy of integrated solutions, aimed at simplifying the business for both clients and operations, structurally lowering operating expenses, enhancing the efficiency of our balance sheet and maximising long-term shareholder value," says Dentsu.

"This will deliver further benefits for our clients and enable stronger growth in the new world post the pandemic." 

The Japan business saw a fall in organic revenue 4.6%. 

"Client spend on advertising was weaker due to the impact from COVID-19, although the digital solution business maintained momentum," says Dentsu. 

Organic revenue in the international business, Dentsu Aegis Network, fell 12% over the six months. Second quarter organic revenue fell 20%.

In Australia, Dentsu says the new leadership team has delivered performance improvements in the first half of 2020, despite the macro environment challenges.

"This includes client growth and retentions, strengthening media and technology partnerships, and improved staff engagement levels. India saw reduced client spend across media," says Dentsu.

CEO Toshihiro Yamamoto says the increasing pace of consumer change prompted by COVID-19 is leading to accelerated digital adoption.

"Our clients recognize the need to respond, by leveraging data whilst creatively engaging with consumers to create meaningful brand experiences," he says.

the numbers for the first half of 2020:

Dentsu first half

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