The Indian business has reported a revenue decline in Q4 2021 due to some disruption with local market clients, said dentsu International while announcing FY2021 annual results.
The revenue decline was mainly caused by the creative business in India.
Yushin Soga, Chief Financial Officer and Director, dentsu International, said, “The creative business reported continued acceleration in performance through the second half, with strong momentum in the U.S. and U.K., but weakness in China and India pulled the overall growth rate lower.”
Region-wise, Americas saw organic growth of 10.6%, EMEA and APAC recorded 11.1% and 4.7% growth, respectively. APAC, excluding Japan, was the weakest region as revenue declined by 2% in China and was also held back in India and Thailand.
To bring back the growth momentum in India, the company said that the interim CEO is leading the market (India) to align with the global operating model which will ensure the company’s services and products are globally consistent.
The year 2021 has been quite challenging for dentsu International in India which saw several top-level exits.
BestMediaInfo.com on Monday reported that Shridhar Toshniwal, Finance Director, dentsu International India, who headed the finance function of creative line of business, has put in his papers. Not just this, dentsu International India’s business saw more than a dozen top-level exits including Ashish Bhasin, CEO, APAC and Chairman India, dentsu International and Anand Bhadkamkar, dentsu India CEO.
In November 2021, BestMediaInfo.com had reported that a whistleblower filed a complaint alleging malpractices, corruption, kickbacks, and a few other discrepancies at dentsu International India. The complaint triggered internal audits that might have led to a few of the top-level exits from the agency in the last few months, the sources have claimed.
Earlier in June last year, on the back of its global organisational redesign, dentsu international created a new structure for its creative and media
Last year, multiple sources informed BestMediaInfo.com that a few leaders also quit because they were upset with the restructuring and realignment of the agency units. On the other hand, a few might have been given a respectable exit due to a fallout ensuing from the internal audit. However, the agency has, throughout this time period, maintained that these exits are a part of the global organisational restructuring and its dentsu 2.0 vision.
Globally, dentsu reported organic growth of 13.1% for the last year, while its operating profit increased YoY to $ 1.55 billion. The organic growth at the Dentsu Japan Network was 17.9%, while dentsu International recorded 9.7%, led by the cyclical recovery in media as well as increased client spending on digital transformation initiatives.
Dentsu Group aims to deliver 4 to 5% organic growth CAGR (2022:2024) from a target of 3 to 4% previously.
Hiroshi Igarashi, President and CEO, Dentsu Group Inc, said, “In 2021 Dentsu Group reported record high revenue (LCoS). We reduced our cost base, transformed our business and delivered margin improvement, resulting in a 44.4% operating profit increase YoY. This performance is testament to the return to growth in our industry, the cyclical recovery in advertising as well as continued investment clients are making in commerce and experience. We remain confident in the long-term growth outlook for the Group and upgrade our medium-term targets.”
The company has announced its intent to spend up to $2.6 billion on investment activity over the next three years.
Igarashi added, “This acquisition fund will be spent growing our exposure to Customer Transformation and Technology – our aim is to reach 50% of our revenue (LCoS) from Customer Transformation & Technology over time. This reflects our vision of where the future growth in the industry lies: data, technology integrated with creativity and innovation to deliver top line growth for our clients.”
In the earnings call, Wendy Clark, Global CEO of dentsu International, said, “We've shared our vision of becoming the most integrated agency network in the world. And the statistics from our clients show we're making progress here. 83 of our top 100 clients now take services from us in 2 or more of our 3 service lines. This shows the demand and potential that already exists within our client base.”