Dentsu Aegis Network reports organic growth up but operating profit slump

Dentsu Tokyo
Dentsu Tokyo

Dentsu Aegis Network suffered an 8.4% decline in its underlying operating profit across the first half of 2018, despite an upswing in the second quarter.

Across the six month period, UOP for the international business of Dentsu was ¥15.3bn (£107m). The vast majority of this was delivered from April to June, when the total was up 7.5% to ¥13.0bn. But that growth was not enough to offset the first quarter, when UOP fell 50.8% to ¥2.3bn.

Dentsu said the figures were the result of investment in global platforms to support growth, including HR, financial and information systems. While investment was spread across the year, it said revenues were highly seasonal, resulting in underlying operating profit being a volatile measure.

Dentsu Aegis Network’s organic growth rates, however, paint a more positive picture of the direction of the business. In the second quarter, this figure was 4.5% – the highest it has been since 2016. Q1’s figure of 2.2% organic growth was also an improvement on the last three quarters of 2017. Across the six months to June, organic growth was 3.4%.

In the EMEA region, organic growth was 2.7% in Q1, 4.8% in Q2. Across six months, it was 3.9% – up from 2.9% in the first half of 2017, and 3.1% in the second.

Dentsu Group’s total revenues in the first half were up 8.6% to ¥481.7m.

When it came to new business, the company said that Dentsu Aegis Network had so far "tracked behind the standout performance of last year", when it won a series a major accounts and topped the Recma ranking.

Dentsu Aegis Network’s Carat suffered a major blow in May when it lost the UK government’s £140m media-buying account to OMD Manning Gottlieb. But it had some better news this week when it retained Mondelez International’s UK and Ireland media business.

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