Dentsu posts 17.2% decline in revenue

11 November 2009

TOKYO: Dentsu, the marketing services conglomerate, posted a 17.2% decline in revenues, to ¥785.86 billion ($8.7bn; €5.9bn; £5.2bn), over the six months to September, as the financial crisis continued to exert a profound impact on trading conditions in Japan.

Overall, the company's net income dipped by 12%, to ¥7.13bn, for the two quarters ending in September, and the owner of Mcgarrybowen has now forecast a total decrease in sales of 14.7% for the full fiscal year closing in March 2010.

"Although signs of improvement in exports and production show that the economy is on the course of gradual recovery from the recession triggered by the financial crisis, uncertainty remained in the Japanese economy," it said in a statement.

By sector, Dentsu's advertising operations delivered a drop in sales of 16%, to ¥758.41bn, compared with the first half of the last financial year, with its information services arm down by 20.7%, to ¥28.71bn, and other services by 54.1%, to ¥10.99bn.

More specifically, magazine revenues fell by 30.2%, with newspapers off by 25%, outdoor by 15.5%, radio by 15.2% and TV by 15.0% overall.

Interactive media, including the internet and mobile, generated the only uptick in expenditure, improving by 6.5% on an annual basis.

Funds delivered from creative services also slipped by 14%, with the returns form its marketing and promotions unit diminishing by 7.9%, while the contraction moderated to a loss of 1.8% with regard to content services.

By region, Dentsu's sales levels in Japan tumbled by 15.5%, to ¥730.70bn, with an even more substantial decline of 35.2% outside of its home country.

In terms of advertiser categories, automotive brands cut back by 31.5% year-on-year, with financial services sliding by 28.4%, information and communications by 15.8%, beverages and cigarettes by 8.7%, cosmetics and toiletries by 9.2%, pharma and medical by 4.9% and food by 4.5%.

The Japan Center for Economic Research has previously predicted that advertising expenditure levels in the Asian nation will deflate by 11.5% in 2009.

Dentsu also argued that the "extremely severe business climate is expected to continue in the second half of the current fiscal year."

Data sourced from Dentsu; additional content by Warc staff