Asia Business Channel

Dentsu’s losses almost doubled in 2020 to $1.3bn

The Dentsu headquarters in Tokyo.

 

Written by John McCarthy, The Drum

Dentsu, the Japanese advertising holding company comprised of around 60,000 staff, has released its 2020 financials, showing that it lost 140.6bn Yen ($1.33bn, £960m) in revenue that year. It has performed noticeably weaker than some of its rivals.

The organization is currently reorganizing its operations into four operating pillars and six global agency brands. In December, it said it will cut 6,000 staff, reducing its headcount by around 10% to increase its margins.

Financials:
• Revenue less cost of sales was down 11.1% to 939bn Yen from 1,047bn Yen in 2019.
• Operating profit fell 11.9%.
• Net loss sat at 159bn Yen.
• That was almost double 2019’s loss of 80.8bn Yen.
• Cost savings totaling over 70bn Yen will be made by 2022 ”to permanently lower the cost base”.

The Context:
• The group announced in November 2020 that it will consolidate its brand agencies into six global brands. Dentsu had previously restructured its business in its seven global markets.
• “We simply have too many brands, almost 300 across both Japan and internationally,” stated Toshihiro Yamamoto, president and chief executive officer at Dentsu Group
• It hasn’t offered guidance for the year due to the variable macro outlook. In contrast, IPG said it expects to return to growth this year.

What It Says:
• Yamamoto says 2020 ”was a challenging year for society, for our clients, our business and, of course, our people”.
• He says Dentsu has made ”significant progress” in its business simplification restructure goals.
• ”Integrated growth solutions remains the center point of our vision”. Customer transformation and technology will reach 50% of group revenue over time, he says.
• Despite the difficulties, it has 95 of the world’s top 100 advertisers as clients.

In the long term, the pandemic has boosted digital use. Yamamoto says this will further boost digital use and innovation across the world. ”This fits precisely with our competitive advantage as one of the very few integrated global communication, data and marketing innovators.”

 

Editors Note:
John McCarthy wrote this article for The Drum, which publishes the latest advertising, marketing and media news, and it is published here with their kind permission. For more marketing news, insight and opinions, visit: https://www.thedrum.com

 

 

 

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