Dentsu posts revenue dip in H1 2025 as international business struggles continue | Analysis | Campaign Asia

Dentsu Group’s latest earnings reveal a slight dip in organic revenue for the first half of 2025, declining 0.2% year-on-year as challenging conditions persist across its core international markets.

The Group has lowered its full-year outlook, trimming its full-year 2025 guidance from an anticipated 1% growth to broadly flat, while maintaining a target operating margin of 12%.

Japan stood out as the Group’s top performer, delivering strong organic revenue growth of 5.3% in H1, driven by double-digit gains in internet media and business transformation services. In Q2 alone, Japan’s organic revenue rose 5.1%, slightly softer than 5.5% in Q1, with net revenue reaching ¥107 billion (approximately $0.97 billion USD). This marks Japan’s ninth consecutive quarter of growth and the third consecutive quarter above 5% organic increase.

By contrast, other regions showed ongoing strain. The APAC region, excluding Japan, experienced a 12.7% fall in organic revenue during Q2, extending its first-half decline to 8.9%. The downturn largely stemmed from weaknesses in customer experience management and creative services, with China and Australia hit hardest, while Taiwan and Thailand delivered steadier performances. Dentsu pledged to accelerate efforts to rebuild its business foundation and review underperforming segments to restore profitability in the region.

The Americas showed signs of gradual stabilisation, with a 1.6% organic revenue decline in Q2 following a more severe drop earlier in the year. For H1 2025, the region’s organic revenue dipped 3.4%, though stable performances in media and customer experience management suggest progress toward recovery.

Meanwhile, EMEA posted a 3.8% organic decline in Q2, hurt mainly by challenging customer experience management markets such as the UK and Northern Europe. Despite comparatively steady media revenues, the region’s overall H1 organic growth slipped 2.4%, falling short of internal targets.

To address these pressures, Dentsu is accelerating its international restructuring efforts, now targeting annual cost savings of approximately ¥52 billion by 2027, up from a previous goal of ¥50 billion, as part of a strategy to lift operating margins to 16-17% by fiscal 2027. Central to this plan is a headcount reduction of about 8%, or 3,400 employees, focused largely on corporate and back-office functions, designed to streamline the organisation without impairing growth potential or competitiveness.

“Our Japan business achieved record-high net revenue and underlying operating profit, marking sustained growth for the ninth quarter in a row,” said Hiroshi Igarashi, Dentsu’s president and global CEO. “However, our international business continues to face negative growth across all regions, resulting in a challenging overall performance.”

Looking ahead, Japan’s growth momentum is expected to continue in the second half, while international media operations anticipate steady performance with some new business wins. However, recovery in customer experience management and creative sectors is forecast to be slower than expected, amidst ongoing client losses, reduced spending, and macroeconomic uncertainty.

Financially, the Group posted an impairment loss on goodwill of ¥86 billion in Q2, alongside a valuation loss on shares of subsidiaries totaling ¥168.1 billion, significantly reducing retained earnings despite being non-cash charges. Consequently, Dentsu suspended its interim dividend of ¥69.75 per share and withdrew its year-end dividend forecast.

Despite a tough environment outside Japan, Dentsu remains focused on restructuring and strategic initiatives aimed at returning its international businesses to profitability, while maintaining optimism that Japan’s solid performance will underpin overall Group resilience.