Dentsu Group (4324) investor relations material

Executive summary

• H1 FY2025 organic growth rate was -0.2%, below expectations due to international challenges, while Japan delivered record-high net revenue and profit.

• Underlying operating profit increased 7.2% year-over-year to ¥67.5B, with operating margin at 12%, exceeding expectations.

• Goodwill impairment loss of ¥86B was recorded in Americas and EMEA due to underperformance and revised growth assumptions.

• Interim dividend suspended and year-end dividend forecast undetermined to prioritize capital enhancement.

• Strategic partnerships, business foundation rebuilding, and cost reduction initiatives are being accelerated, especially for international operations.

Financial highlights

• Consolidated net revenue for H1 FY2025 was ¥562B, down 2.1% year-over-year.

• Underlying operating profit rose to ¥67.5B (+7.2% year-over-year), mainly due to strong Japan performance and cost controls.

• Statutory operating loss of ¥36.5B and net loss of ¥73.6B, primarily due to goodwill impairment.

• Underlying net profit was ¥32.4B, nearly flat year-over-year; basic EPS was negative ¥283.72.

• EBITDA for H1 FY2025 was ¥73.2B, up 5.5% year-over-year.

Outlook and guidance

• FY2025 group organic growth guidance revised to flat; Japan to maintain 3% growth, international business revised to -2%.

• Operating margin guidance maintained at 12% for FY2025.

• Statutory operating profit guidance revised from ¥66B to a loss of ¥3.5B; net profit guidance revised to a net loss of ¥75.4B.

• Full-year net revenue forecast lowered to ¥1,180.1B; underlying operating profit to ¥141.6B.

• Dividend resumption timing undetermined; focus remains on asset sales and capital allocation.