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Denstu Tightens Costs As COVID-19 Takes Hold

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Dentsu reported weak global earnings in the first quarter as the global advertising group tightened costs to meet a downturn from COVID-19. 

The company, reporting a fall of 0.8% in organic growth for the three months to the end of March, is seeking a 7% cut in costs for 2020. 

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The Japan business delivered revenue growth of 2.1% due to a strong start to the year in digital solutions and marketing promotions. 

However, organic growth at Dentsu Aegis Network, the international business, fell 3.3%, dragged down by negative growth in APAC, particularly the Chinese and Australian markets due to account losses in 2019 and some early impact from COVID-19. 

Dentsu last month announced the appointment of Wendy Clark, former DDB Worldwide president and CEO, as the global CEO at Dentsu Aegis Network. She starts in September. 

Locally, Angela Tangas, the former chief commercial officer, replaced Henry Tajer as CEO in Australia and New Zealand late last year. 

Cost measures at Dentsu include reduced working hours and temporary salary cuts. 

“COVID-19 is causing a slowing in demand across our industry, and we are not immune,” says CEO Toshihiro Yamamoto.

“This has put pressure on our performance in Japan and the International business.

“We are therefore anticipating a material decline in revenues across our business in FY2020. We have taken swift cost actions to mitigate this revenue decline, protect margin and safeguard our people’s jobs.”

The company has withdrawn its full year guidance. The restructuring announced in December 2019 is progressing as planned.

“The importance of working together, collaborating and integrating the Japan and International business is essential to respond to COVID-19 and support our clients’ transformation, particularly during this period of disruption,” says Yamamoto.

“The concept of one dentsu has never felt more important, our employees are our greatest asset, and I am proud to lead the 66,000 diverse and talented people we have within the Dentsu Group.”

Credit: Ad News

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