Feb 14, 2018

ADK sees profits rise 6% in 2017

Japan's third-largest advertising agency enters privatisation on a stable footing.

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ADK posted record gross profit of ¥54.2 billion (US$506 million) in 2017, a year-on-year increase of 6%. Operating income rose 28.2% to ¥7.1 billion ($65.9 million). ADK reported an increase of 2.4% in operating income generated by overseas subsidiaries.

In Japan, operating income increased ¥496 million ($4.6 million) to ¥5.1 billion ($47.5 million). Greater China reported an increase of ¥287 million ($2.6 million), with three Shanghai subsidiaries becoming profitable. Asia contributed a ¥137 million ($1.3 million) increase, led by Thailand. Europe and the US contributed a ¥75 million ($696,750) increase, led by the US.

Gross billings increased marginally to ¥352.8 billion ($3.2 billion) from ¥352.6 billion in 2016. Overseas billings accounted for 8.9% of the total, up from 8.3% in 2016. ADK attributed increased profitability to in-house production and digital in Japan, and structural reform in China.

ADK saw digital billings increase 24.4% and TV billings increase 2.9%. Marketing and promotion slumped by 13.9%. In terms of client sectors, information and communication contributed the most billings (¥40 billion ($371.6 million), up 10.2% year-on-year). Spending by household goods companies increased the most (35.4%), while the automotive sector showed the biggest decline (33.6%).

ADK did not provide a forecast for 2018 due to its privatisation as a result of selling to Bain Capital at the end of 2017. It referred to its ongoing aim of becoming a “consumer activation company”. ADK said it plans to pursue “a wide variety of product development”, M&A and collaborative initiatives, and investment in business infrastructure.

ADK completed its sale to Bain Capital in December, ending a 25-year relationship with WPP. The company has since changed its international leadership structure, with Yasuyuki Katagi replacing Rob Sherlock as CEO of ADK Global (the agency's international business). Sherlock, who has worked with the company since 2014, has become ADK Global's chairman.

This article has been updated to clarify the increases in ADK's operating income.

Source:

Campaign Japan

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