Dentsu has widened its cost cutting, accelerated its reduction of international entities as it takes longer than expected to turnaround loss-making markets.
“Despite progress, macro uncertainty is expected to leave some markets loss-making in FY2026,” the company said.
The Japan-based global advertising group cut just under 900 jobs in the first half of 2026, according to an update to the management strategy revealed with June quarter results.
The headcount reduction program is on track, with around 3,000 of a planned 3,400 job cuts completed.
The new CEO, Takeshi Sano, who ran the profitable Japan business, is restructuring, seeking to turn around a loss making international business.
Dentsu has set a new target to cut global HQ costs by about 30% by the 20028 financial year.
The company will reduce the number of international entities by 70 to 80 in the current financial year, with another 50 to 80 under consideration in the 2028 financial year.
The number of international entities has already been halved since January 2021, falling from more than 1,000 to current levels by January this year.
Dentsu has also pushed back its timeline for eliminating loss-making markets.
The original plan targeted no markets operating at a loss by the 2026 financial year and all four regions contributing to shareholder value by 2027.
Under the revised plan, the 2027 financial year is now the target for no loss-making markets, with all four regions expected to contribute to shareholder value by FY2028.
Dentsu has set new 2028 financial year targets of a 16% operating margin and organic growth of 2% to 3%.
The current full year guidance is 1% growth.
The latest update on the turnaround says market growth opportunities have not been fully captured, and that the company has complex operations with insufficient focus and execution discipline.
The company said it will strengthen profitability and implement available measures to resume dividends as early as possible.
Dentsu reported flat organic growth at just 0.3% in the June quarter but managed to lift profit and its operating margin on the back of cost cutting and restructuring.
Net revenue was up 3.7% to ¥583,068 million in the half year to June, underlying operating profit was 6.6% higher at ¥71,982 million, helped by the sale of the Dentsu Ginza Building, and the operating margin was 12.3%, up 30 basis points.
The Japan-based global advertising group is forecasting full year revenue up 3.9% and underlying operating profit down 3.6%.
Japan recorded organic growth of 5%, the Americas fell 5% and APAC was down 3.8% with Australia, China, and Taiwan posting falls.
Australia’s organic growth is listed as between 0% and -10%.
Dentsu expects its ANZ business, which has recorded three years of negative numbers and had to ask its parent company for an injection of capital, to return to organic growth by the end of this year.
Australia has recently undergone major structural overhauls led by ANZ CEO Rob Harvey.
Slides from dentsu's June quarter update:
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.