Dentsu Profits in H1 Freefall

18 November 2003

Tokyo-headquartered Dentsu, the globe's fifth largest agency group (by 2002 billings), reported Monday a 77% first-half earnings nosedive.

Profit declined to ¥6.8 billion ($0.062bn; €0.053bn; £0.037bn), equating to a 30% decline in pre-tax profits to ¥16.5bn on sales of ¥817bn.

This the agency attributes to the absence of two major events which buoyed last year's numbers -- the soccer World Cup and its sale of a 21% stake in Bcom3 to Publicis -- in aggregate contributing a ¥90.6bn one-off gain.

The disappointing result came despite a perceived recovery in Japan's battered advertising market. According to the agency, signs of revival in private sector demand plus the current stock market rally are likely to create a more benign environment for the second half-year.

There were accompanying nods from analysts. "We don't expect a V-shaped recovery but if the economy does not turn down again [Dentsu's profits] could rise in the second half," concurred Deutsche Securities analyst Takashi Murakami in Tokyo.

Peering into its full-year crystal ball, Dentsu forecasts flat sales of ¥1,692bn with an 8% year-on-year drop in pre-tax profits to ¥41.5bn. Net income is expected to decline by 19% to ¥18.7bn.

Data sourced from: Financial Times; additional content by WARC staff