Dentsu Group sees organic growth surge in India for Q2 after a long period of underperformance

In H2 2024, the group will emphasise cross-selling across the region and implementing the One Dentsu strategy, with results expected to align with initial forecasts.

Dentsu Group, a Japanese advertising agency, announced its quarterly results as it returned to growth in the second quarter ended June 30, 2024. The group reported an improvement of 0.2% organic revenues yoy.

In Q2 earnings report, the group mentioned, "There are some encouraging signs including positive organic growth in all practices in India after a long period of underperformance, as client loss have bottomed out."

The advertising network's APAC organic revenue for Q2 was -6.2%, compared to a -7.1% decline in Q1. Last year, Dentsu reported a -7% organic revenue decrease in Q2. For the first half of the year, organic revenue in APAC was down by 6.6%.

In the second half of 2024, focus remains on the continued improvement in organic growth, delivering solutions that connect brand potential to business impact to support its clients’ growth.

On a constant currency basis Japan reported 1.8% growth in net revenue in the second quarter, the Americas a decline of 0.2%, EMEA an increase of 13.9% and APAC growth of 2.6%. It reported net revenue increased 11.0% with currency positively impacting by JPY 18.7 bn and M&A contributing JPY 9.3 bn.

Q2 in Japan, organic growth continued to be robust supported by double-digit growth in Internet media and increased client spend from existing clients plus new client wins. The Americas reported Q2 organic revenue decline of 3.7%, showing continued quarterly recovery from Q423. EMEA reported organic growth of 7.8%, mainly due to one-off negative impact of prior year.

Media performance in local markets was stronger than expected in Q2, and is expected to remain steady in H2. APAC reported organic revenue decline of 6.2% as CT&T (Customer Transformation and Technology) remains challenging, particularly in Australia due to client losses. However, full-year forecast is in line with expectations with continued initiatives to support turnaround of the business.

The rise in operating profit yoy is due to improving revenues delivering operating leverage. Cost management ensured margin delivery and is on track to deliver the FY2024 guidance of c. 15%. Total net revenue from CT&T (Customer Transformation and Technology) is reported at 29% of Group net revenues in H1 FY2024.

Hiroshi Igarashi, president and global CEO, Dentsu Group Inc., said, "The second quarter saw a return to growth, with the Group reporting organic revenue growth of 0.2% yoy. The Group has seen continued sequential quarterly improvement with momentum in our client pitch win rate. We reiterate our full-year guidance of approximately 1% organic growth and c. 15% operating margin. Over the last six months, we have made decisive progress in aligning our people, brand, and market presence to strengthen our dentsu proposition. We have unlocked our collective power and potential by operating as One dentsu, which is beginning to show a positive impact on performance."

He added, "Our H1 net new media wins across Americas, EMEA and APAC are the highest for the past five half years and Japan has seen a recovery in pitch win rates. We can see the implementation of One dentsu is affecting positive change within our organisation."