Dentsu opts for ‘pure holding group’ structure – says ‘no green shoots of recovery’ in China, Australia

Dentsu has reported a decline of 12.3% in quarter three of FY2019 and 9.7% in the first nine months of FY2019 for the Australia and Pacific region, excluding Japan.

This weakness was driven by Australia and China, according to the company, with “no green shoots of recovery in either market, both of which continue to severely impact the regional and group performance”.

President and CEO of Dentsu Inc Toshihiro Yamamoto also announced that a new group management structure will be effective from January 2020.

At a group level, the new structure will see Dentsu Inc become a “pure holding company”, changing its trading name to ‘Dentsu Group Inc’. An in-house company called Dentsu Japan Network will be established “to formulate business plans and build the infrastructure for the Group’s overall operations in Japan”. The result of Dentsu Japan Network, it hopes, will be “a flat and tightly knit network that is able to respond quickly by forming optimal teams to tackle all issues”.

The new structure, Dentsu said, will ensure “people within Dentsu are connected openly across countries and organisations on a global level, bringing together diverse perspectives, and making it a matter of course for innovation to be generated from anyone, anywhere”.

“The aim is to become new Dentsu that continues to create new value and new businesses by forming flexible teams not only within Dentsu, but also with various external partners,” it said in a statement.

The Dentsu Group was back 1% on organic growth in the first nine months, and delivered total growth of revenue less cost of sales of 3.3%. DAN, the international business, had 4.6% growth of revenue less cost of sales, and was also down 1% on organic growth.

DAN faced the toughest comparables in quarter three, with the organic growth result impacted by declines in APAC. Excluding the impact of Australia and China, quarter three’s organic growth was 1.8%.

The DAN Asia-Pacific team is led by Ashish Basin, who was promoted to the role in September from CEO of South Asia. The changes in the Asia-Pacific network started with Singapore in January and expanded out to the wider network in March this year. It has been a year of deep cuts for the network with many senior managers leaving , most recently DAN global CEO of creative Dick Van Motman.

In Australia, Henry Tajer took up the CEO post in January, and has spent the year restructuring his team.

Yamamoto was hopeful about what quarter four’s results will look like, driven by Japan.

“The Japan business has seen sequential improvement through each quarter of 2019, with the fourth quarter set to benefit from many large scale events, including the successful Rugby World Cup hosted in Japan and the Tokyo Motor Show,” he said.

“In the international business, in order to future-proof our business and serve clients more effectively, we have streamlined and consolidated our offering around three lines of business: Creative, Media and CRM. These lines of business have been designed around client needs and will ensure we are set up to help clients win, keep and grow their best customers—by being data-driven, tech-enabled and ideas-led.

“2020 is a year of transition and by 2021, we will be operating under these three lines of business and be truly integrated by design.”


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