Dentsu president announces retirement as holding company reports strong Q3 performance

Japanese holding company Dentsu Group has published its third-quarter results, revealing strong organic growth figures for both its international and Japan businesses. Its president and chief executive, Toshihiro Yamamoto, has announced his retirement and named his successor.

Dentsu’s president and chief executive, Toshihiro Yamamoto, is stepping down

What do the results show?

• Net revenue in the third quarter was ¥255bn ($2.2bn), an increase of over 30% on the same period last year. The operating margin for Q3 was 23.5%.

• For the year-to-date, group revenue was ¥696.3bn ($6.1bn), an increase of just under 13% when currency changes are taken into account.

• Organic YTD growth at Dentsu Japan was 19.4%, and 12.9% at Dentsu International; organic growth for the group as a whole is 12.6%.

• Operating margins increased to 18.9% between January and September. Dentsu said it expects its Q4 margin to be a little thinner because of “phasing of investments.”

• Still, Dentsu has revised its guidance for 2021 to predict 12% annual organic growth and a margin of 18%, up from 16.4%.

Changing of the guard

• President and chief executive Toshihiro Yamamoto has chosen this moment to announce his retirement. He’ll be succeeded by Hiroshi Igarashi, currently the head of Dentsu Japan; Norhiro Kuretani will step up to take his place as president and chief exec at Dentsu Japan Network.

• In addition, Tim Andree is to become non-executive chairman of the board. Four new independent directors will be nominated at Dentsu’s March annual general meeting, representing ”a cross-section of leaders across a broad range of capabilities including global corporate management, digital, finance and audit,” the company said in a statement.

• Discussing his decision, Yamamoto said: ”After 40 years of service, and five years leading Dentsu Group, I will be stepping down from my role as president and chief executive officer of Dentsu Group Inc at the end of the year. It has been an honor and a privilege to serve a company with such a rich history in such an exciting, fast-paced industry. Over the past 12 months we have laid the foundation for the company to achieve sustainable growth and the third-quarter results show a company that’s recovering, capitalizing on the market opportunities with rebounds across all business lines.

• ”Under new leadership from within, and with a refreshed board, Dentsu Group will accelerate the path forward to become the world’s leading organization that transforms our client’s business, driving top-line growth through the power of our creativity, technology and people. I have been the proud custodian of Dentsu Group for five years and I am confident that Hiroshi Igarashi, Wendy Clark and Norihiro Kuretani will lead our people, our clients and our business into a new and exciting chapter of change and growth from 2022. I would like to extend my thanks to all our clients, partners, shareholders and all our 64,000 talented employees for their continued support and I believe that every day, together, we are one step closer to achieving our vision to realize a better society.”

Which regions and areas of the business performed best?

• Dentsu Japan saw very high growth in Q3, with 49.7% organic growth ”exceeding all expectations.” The group credited this in part to demand driven by the Tokyo Olympic Games.

• Dentsu International also had a good quarter, driven by media (17.3% organic growth), CXM (11.2%) and its strengths in e-commerce and experience.

• In the US, Dentsu saw 16% organic growth, with 25% organic growth for its media business, 20% for CXM services and 30% for its B2B practice.

• Despite Dentsu’s creative business across the Americas growing 20% in Q3, revenue was hit in Brazil due to a number of client losses. Dentsu said its growth in the Americas came primarily from additional work with existing clients, rather than new wins.

• Dentsu reported 12.9% growth in EMEA for Q3; Asia Pacific (excluding Japan) saw 7.6% organic growth in the same period.