Dentsu Group Outlines Growth Strategy in FY2024 Financial Report

Dentsu Group Inc., the Japanese advertising holding company, has released its FY2024 Consolidated Financial Results, reporting a 5.7% year-on-year increase in net revenues. Organic growth remained largely unchanged at -0.1% year-on-year, aligning with the company’s November 2024 guidance. However, a steady quarterly improvement was observed throughout the year, culminating in a 2.6% organic growth in the fourth quarter.

As part of its newly announced Mid-Term Management Plan, Dentsu has set ambitious financial targets for FY2027, aiming for 4% organic growth, an operating margin of 16-17%, operating cash flow of JPY 140 billion, and a return on equity (ROE) in the mid-teens. The company reaffirmed its commitment to driving bold changes and structural reforms to regain strong organic growth.

Operating under the “One dentsu” strategy, the company intends to enhance corporate value while ensuring sustainable growth for both the organization and society. The fourth quarter saw stronger-than-expected revenue in Japan, primarily due to improved performance in internet media. The Americas experienced steady quarterly gains, particularly in Media, though the recovery of the CXM (Customer Experience Management) business remained sluggish. In EMEA, Media expanded at a mid-single-digit rate, with strong results in select local markets. Meanwhile, the APAC region continued to struggle with CXM, while Media remained flat year-on-year.

Dentsu’s President and Global CEO, Hiroshi Igarashi, noted that the Group’s FY2024 performance aligned with prior expectations, with organic revenues staying largely stable and operating margins exceeding forecasts. He highlighted sequential quarterly improvements, particularly in Japan, and pointed to notable global client acquisitions within the company’s international business. However, he acknowledged that a substantial goodwill impairment was recorded in the fourth quarter, reflecting a cautious outlook for EMEA and the Americas. He emphasized that recognizing these uncertainties would help establish a more resilient balance sheet and create a stronger foundation for executing the newly announced Mid-Term Management Plan.

The Mid-Term Management Plan, covering FY2025 through FY2027, is designed to achieve 4% organic growth and a 16-17% operating margin by FY2027. Igarashi outlined the company’s strategic priorities, which include reassessing core business strengths, refining its focus, and adopting a differentiated approach to cater to evolving client needs.

He also underscored the company’s commitment to continued investments in data, technology, talent, and corporate culture. Additionally, Dentsu plans to expand its media capabilities in key markets while reevaluating underperforming businesses and restructuring its operations. The overarching goal remains to restore competitiveness and return to a sustainable growth trajectory.

Reaffirming Dentsu’s long-term vision, Igarashi stressed the company’s dedication to leading people-centered transformations that shape society. He reiterated the importance of strengthening the “One dentsu” approach and advancing Integrated Growth Solutions to drive client success and long-term business growth.

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