Dentsu revenue up as new Japan division created in restructuring
Dentsu, the Japanese advertising giant with a significant involvement in sport, has reported revenue less cost of sales of Y674.2 billion ($6.2 billion) for the first nine months of 2019, while unveiling a new group management structure.
The turnover represents a 3.3-per-cent increase on a constant currency basis from Y668.3 billion in the same period last year.
However, underlying operating profit fell from Y89.5 billion to Y75.5 billion.
The Japan business experienced revenue growth less cost of sales of 1.4 per cent as a decline in traditional media was offset by growth in digital-related services and favourable results in subsidiaries.
The full-year results will be boosted by major events in the fourth quarter such as the recent Rugby World Cup, which was held in Japan, and the Tokyo Motor Show.
International arm Dentsu Aegis Network delivered 4.6-per-cent growth in revenue less cost of sales in the first nine months of the year, with the third quarter presenting the most challenging comparisons with 2018, and further declines in the Asia-Pacific region, attributed to the Australian and Chinese markets.
However, the Americas, notably USA, produced healthy revenue, and is expected to contribute to further growth internationally in the rest of the year.
Dentsu was responsible for signing up lower-tier sponsors and suppliers for the Rugby World Cup and is selling domestic sponsorship packages for the 2020 Olympic Games in Tokyo.
In addition, it holds broadcast distribution rights to the Olympics in 22 Asian territories in a deal that it has extended until 2024.
Dentsu also distributes rights to the IAAF World Athletics Series outside Europe and Africa, and handles rights outside Europe to swimming’s FINA World Championships.
Within Japan, it is the official marketing partner of soccer’s top-tier J.League, and will be responsible for distributing international media rights to that competition (excluding Japan and China) in a three-year deal that comes into effect in 2020.
Under the restructuring, which sees the current Dentsu Inc convert to a pure holding company called Dentsu Group Inc, a new in-house operation, Dentsu Japan Network, is being created to run all 116 domestic businesses.
DJN, headquartered in Tokyo, will be headed up by president and chief executive Hiroshi Igarashi.
Meanwhile, the Dentsu Aegis Network name is being retained for the international arm, which oversees 880 companies, and is based in London.
DAN, which includes media buying agencies Carat and Vizeum, has maintained a separate identity since Dentsu acquired Aegis for £3.2 billion ($4 billion) in 2012.
The changes, which come into effect for 2020, are part of the ‘One Dentsu’ strategy to amalgamate operations across the group.
Toshihiro Yamamoto will remain at the helm of the organisation as president and chief executive.