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Dentsu says eliminating ‘excessive overtime’ in Japan caused profit fall

Dentsu Inc has posted a slump in its first quarter profits as the advertising giant continues to crack down on employee overwork.

Dentsu CEO Toshihiro Yamamoto: “The operating environment remains challenging.”

The Japanese behemoth claimed  efforts to reform its “work environment” caused a 13 per cent fall in the company’s operating profits against Q1 last year.

In an announcement posted earlier this year, Dentsu said it would undertake “comprehensive reforms” to “eliminate excessive overtime” and create a “better working environment in Japan”.

The changes are being implemented three years after Dentsu was rapped for the death of its employee Matsuri Takahashi, whose suicide was ruled by officials as being caused by ‘karoshi’ – a Japanese term which refers to “death by overwork”.

Nevertheless, the company saw its Q1 revenue rise by 5.7 per cent from 2017, a figure helped by new business wins from the group’s international arm, Dentsu Aegis Network.

The Japan operation posted total revenue growth of 1.9 per cent, which was attributed to a 23 per cent rise in its digital business. Meanwhile, DAN’s digital contribution was said to have grown by 61 per cent.

Outside of Japan, the Asia-Pacific markets of China and Australia both fared poorly, posting no organic growth.

Taiwan and Thailand saw more success with up to 5 per cent growth from Q1 last year, while India emerged the strongest regional market with up to 10 per cent revenue growth.

DAN chief executive Jerry Buhlmann said: “We have delivered a robust performance in the first quarter.

“Our continued good new business performance demonstrates the strength of our product, talent, and capabilities and supports continued momentum in the business.

“In a fast-changing market, our integrated operating model means we are well-placed to deliver seamless and highly innovative solutions built around our clients’ needs. We remain focused on leading in digital, data, and content to deliver better performance for our clients.”

Dentsu Inc president and chief executive Toshihiro Yamamoto added, “The operating environment remains challenging, yet momentum is with the business.”

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