Dentsu Group (4324) investor relations material

Executive summary

• Fiscal 2025 organic growth slightly exceeded guidance, with Japan achieving 6.2% organic growth and record results, while international profitability improved due to restructuring and business reviews.

• Significant goodwill impairment losses, including JPY 396.1 billion overall and JPY 310.1 billion in Q4, mainly in Americas and EMEA, reduced goodwill balance by more than half.

• Net loss attributable to owners widened to JPY 327.6 billion, driven by impairment losses; no year-end dividend for FY2025 and none forecast for FY2026 due to negative distributable profit.

• Strategic focus on restoring international business profitability, cost efficiency, and business foundation rebuilding, with new management structure and CEO appointed.

• FY2026 aims for continued Japan growth, US CXM recovery, and further competitiveness and profitability.

Financial highlights

• FY2025 net revenue: JPY 1,197.5 billion (+0.3% YoY); underlying operating profit: JPY 172.5 billion (-2.1% YoY); operating margin: 14.4% (down 40bps YoY, but above guidance).

• Statutory operating loss: JPY 289.2 billion; statutory net loss: JPY 327.6 billion, mainly due to goodwill impairment.

• Underlying net profit: JPY 93.5 billion (+0.7% YoY); underlying basic EPS: JPY 360.38 (+1.4% YoY); statutory basic EPS: JPY -1,262.04.

• Net debt/EBITDA: 0.95x at year-end; cash and cash equivalents at year-end: JPY 295.2 billion.

Outlook and guidance

• FY2026 organic growth rate expected at 0%-1% overall; Japan 2%-3%, Americas -2%, EMEA and APAC ~1%.

• Net revenue forecast: JPY 1,230.2 billion (+2.7% YoY); underlying operating profit: JPY 166.3 billion (-3.6% YoY); operating margin in the 13% range.

• Profit attributable to owners forecast at JPY 69.7 billion; basic EPS at JPY 268.50.

• No dividend planned for FY2026.

• Targeting 16% operating margin in FY2027 through profitability improvements.