At the same time it announced a CEO change at Dentsu Aegis Network, Dentsu Group has reported growth in revenue but a decline in underlying profit through the first nine months of the year.
Specifically, Dentsu Group reported 8% growth in revenue less cost of sales (on a constant-currency basis) and 4.4% organic growth, compared with the first nine months of 2017. The company said its Japan business delivered 4.1% revenue growth thanks to an increase in digital-related services, favorable results in subsidiaries and new business wins. Meanwhile, Dentsu Aegis Network recorded 10.8% revenue growth on a constant-currency basis and 4.6% organically.
Revenue for Japan was 272.7 billion yen (US$2.39 billion), while DAN's revenue figure came in at 396 billion yen (US$3.48 billion).
However, the company said underlying operating profit declined 4.0% (on a constant-currency basis), declining 1.4% in Japan and 10.5% internationally, compared to the first three quarters of last year. The company pinned the decline on "planned investments in the working environment reforms" in Japan and investments in global platforms and systems at the DAN level.
The real-money figures for underlying profit for the first nine months: 61.5 billion yen (US$540 million) from Japan and 28 billion yen (US$246 million) for DAN.
The company said it would stand by its earlier guidance for the full year, provided in August, which calls for net profit of 79.5 billion yen (US$698 million) on revenue (less cost of sales) of 955 billion yen (US$8.38 billion), which would represent a year-over-year increase of 8.8% in revenue but a 24.6% decline in net profit.
"In the third quarter of FY2018, Dentsu Group recorded 5.4% organic growth [compared with the second quarter]," Toshihiro Yamamoto, president and CEO of Dentsu Inc., said in a media release. "Dentsu Aegis Network achieved 7.0% organic growth—the fifth consecutive quarter of improving organic growth, and the business in Japan delivered 2.7%." Dentsu Aegis Network has shown strong growth, with September the strongest month in the quarter, he added.
Growth is becoming "broader based, with eight of our top 20 markets delivering double-digit organic growth", Yamamoto said.