Dentsu sees profits slip and digital grow

Dentsu Group has posted a fall in organic gross profit of 2.1% for Q3 and 1% for the nine-month period from January to September.

Organic gross profit for Japan fell 5% in Q3, which Dentsu attributed to a slump relative to the 2016 Olympic Games in Rio, and to costs involved in its ongoing work reform program. Dentsu Aegis Network’s organic gross profit dipped 0.2% for the same period. It slid 5.5% in APAC and 2% in the Americas, but increased 5.9% across EMEA.

For January to September, organic gross profit fell 2.4% in Japan to 263.1 billion yen (US$2.3 billion) and remained flat for Dentsu Aegis Network. Total group operating profit fell 24% to 63.7 billion yen ($56 million).

Overall gross profit grew 11% from January to September, and 23.5% for Dentsu Aegis Network. Foreign exchange played a role, and so did acquisitions including that of Merkle last year. Dentsu said M&A activity contributed a 67.9 billion yen increase in gross profit. The company made 17 acquisitions and investments during the first nine months of the year.

Dentsu Aegis Network accounted for 57.6% of gross profit for the group. The report also noted that Dentsu Aegis Network won some major pieces of business that will not register until next year.

Digital continued to play a bigger role, making up 43% of gross profit across the group. While TV still dominates in Japan, digital now accounts for 21.5% of the business there. By contrast, nearly 60 percent of Dentsu Aegis Network’s business is digital.

Dentsu’s full-year forecast remains unchanged. It anticipates an operating profit of 136.5 billion yen ($1.1 billion).