The Americas led organic growth with +13.4% followed by Japan at +10%, APAC at +5.2% growth, and EMEA at +3.3%.
Dentsu Group has reported a “strong start to the year” with 9.1% organic growth, while Dentsu Japan Network grew 10.0% and Dentsu International 8.4%, which marks a record high first quarter performance in net revenues, underlying & statutory operating profit.
The Group has upgraded its FY2022 organic growth guidance to 4% to 5% from 4% previously.
“Dentsu Group has seen a strong start to the year with organic growth ahead of expectations as clients continue to invest in brand experiences informed by data and analytics,” said Hiroshi Igarashi, President and CEO, Dentsu Group Inc.
“The changing macro impact from the Russia-Ukraine conflict, inflation, interest rates rises around the world, and the continued COVID-19 restrictions in China are well reported – however, we feel confident in our ability to deliver growth in 2022.”
The Americas led organic growth with +13.4% followed by Japan at +10%, while APAC (minus Japan) saw +5.2% growth, and EMEA at +3.3%.
Japan led in the proportion of net revenue with a 46% share, followed by the Americas at 26%, EMEA at 19%, and APAC at 9%.
Dentsu added that the group continues to be in the process of negotiating the transfer of ownership of the Russian business to local partners.
“The situation in Ukraine remains at the forefront of our minds and we continue to support our colleagues in the region with accommodation arrangements, border transfers and legal assistance.,” said Igarashi.
Q1 2022 Key Financials
Group net revenue JPY 258.8 bn (YoY +16.4%, +12.2% on a constant currency basis)
- 14.9% growth in net revenue at Dentsu Japan Network, and 17.7% (10.1% on a constant currency basis) at Dentsu International.
- Net revenue increased due to organic growth of JPY 21.6 bn, currency positively impacted by JPY 8.1 bn, and M&A contributed JPY 6.6 bn.
Group organic growth was 9.1%.
- 10.0% organic growth at Dentsu Japan Network, and 8.4% at Dentsu International (9.2% excluding Russia). Q1 FY2022 saw a growth in all regions by continued recovery in media as well as increased client spend on digital transformation initiatives.
Group underlying operating profit increased by 22.0% (20.3% on a constant currency basis) yoy to JPY 54.9 bn. Operating margin improved by 100 bp (140 bp on a constant currency basis) to 21.2% reflecting operating leverage from higher revenues and the continued focus on costs across the Group.
- At Dentsu Japan Network, underlying operating profit was JPY 42.6 bn (YoY +25.6%); operating margin of 35.8% (YoY +310 bp); the highest ever first quarter margin. Costs are expected to increase through the year.
- At Dentsu International, underlying operating profit was JPY 13.8 bn (YoY +13.0%, +7.2% on a constant currency basis); operating margin excluding Russia of 10.4% and operating margin including Russia of 9.9% (YoY -40 bp, -30 bp on a constant currency basis).
Group underlying net profit (attributable to owners of the parent) increased by 28.7% yoy to JPY 34.9 bn due to the increase of underlying operating profit.
- The underlying basic EPS of JPY 127.86 (Q1 FY2021: JPY 96.53).
Group statutory operating profit and net profit (attributable to owners of the parent) are of JPY 40.7 bn and JPY 23.9 bn.
- Statutory operating profit and net profit (attributable to owners of the parent) were boosted by an increase of underlying operating profit and the gain on sale of property assets in Japan, partially offset by an asset write-down related to the ongoing disposal of the Russia business.