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Dentsu profits decline linked to workload reduction for employees

Dentsu has predicted a year-on-year decline in profits of 2.4 per cent in 2017, due to cost increases linked to a reduction in staff workloads. The company made a pledge at the end of last year to reassign work and hire additional staff in order to distribute responsibilities more evenly following the suicide of 24 year-old Matsuri Takahashi due to overwork.

Takahashi joined Dentsu in April 2015 and committed suicide nine months later, on Christmas Day 2015, after a big increase in her workload. At the end of last year, Dentsu posted a net profit of 83.5 billion yen (US$730 million) for the year ending December 31, an increase of 0.5 percent on 2015.

The company also reported revenues of 838.36 billion yen (US$7.3 billion), up 2.4 percent from 2015, and a gross profit of 789.04 billion yen ($6.9 billion). The group’s operations in Japan reported gross profit growth of 4.3 percent “driven by strong performance of subsidiaries in Japan”.

Meanwhile, a recent investigation into overcharging at Dentsu appeared to have little effect on the company’s overall financial standing with its digital businesses making a significant contribution to gross profits: 19.7 per cent in Japan and 52.3 per cent for Dentsu Aegis Network.

In its financial results announcement, Dentsu omitted reference to the scandal and to the resignation of Tadashi Ishii as president and chief executive – following Takahashi’s death.

Toshihiro Yamamoto, the new chief executive, said: “We continued to make strong progress against our strategy, particularly in our ongoing investment in digital capability. This is helping forge solid growth for our clients and for the first time our international business has delivered over 50 percent of revenue from digital.”

He added that the company would “pioneer a new working environment in Japan” in the coming year.

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