Dentsu to slash 3,400 overseas jobs in cost-cutting overhaul amid operating losses

New Delhi: Japanese advertising giant Dentsu Group Inc. announced plans to cut approximately 3,400 jobs in its international operations, representing 8% of its overseas workforce, as part of a cost-reduction strategy to address mounting financial losses. 

The decision, disclosed in a statement on August 14, follows a reported operating loss of ¥62 billion ($539 million) for the second quarter of 2025, driven by an ¥86 billion impairment loss due to sluggish performance in the United States and Europe.

The layoffs, targeting headquarters and back-office functions outside Japan, aim to streamline operations without compromising the company’s growth potential or competitive edge, according to Dentsu’s statement. 

The move comes as the company revised its full-year forecast, now expecting an operating loss of ¥3.5 billion for 2025, a sharp downgrade from its earlier projection of ¥66 billion in operating profit.

Global CEO Hiroshi Igarashi described the restructuring as an urgent response to the “extremely challenging” performance of Dentsu’s international business, particularly in the Americas and Europe, where the company has faced negative revenue growth. “I deeply regret this situation and offer my sincere apologies on behalf of the company,” Igarashi said, emphasising the need to rebuild the business foundation to restore profitability.

Dentsu’s Japan operations, in contrast, reported record-high net revenue and operating profit for the first half of 2025, marking nine consecutive quarters of growth with over 5% organic growth for the third straight quarter. 

However, the international division’s struggles, particularly in customer experience management (CXM) and creative segments, have dragged down overall performance. The company cited project losses and shifts in client marketing strategies as key factors.

To counter these challenges, Dentsu is targeting ¥52 billion ($355 million) in annual operating cost reductions by fiscal 2027, exceeding its initial target of ¥50 billion. 

The company is also exploring strategic partnerships for its overseas operations and investing in data, technology, and AI-driven capabilities to enhance competitiveness. 

Despite suspending its interim dividend due to a projected net loss of ¥75.4 billion for the year, Dentsu aims to achieve an operating margin of 16% to 17% by 2027.

The company has not detailed the specific regions or roles affected, but the focus on back-office functions suggests a leaner corporate structure is in the works.