India, Thailand buck APAC slump as Dentsu upgrades FY25 profit guidance

New Delhi: India has emerged as a rare bright spot for Dentsu Group Inc. in an otherwise weak Asia-Pacific performance, with the Japanese advertising major singling out its India business and India-based global capability centre as key pillars of its growth and innovation strategy.

On its Q3 earnings call, Dentsu highlighted that India, along with Thailand, delivered positive organic growth in the APAC region (excluding Japan), which posted a 10.1% organic decline over the nine-month period due to double-digit negatives in customer experience management (CXM) and creatives and continued challenges in Australia. While the company did not disclose specific India growth numbers, it said media remained stable in the region and that India was gaining from strong market positioning and recent client wins.

Dentsu also underscored the growing importance of India in its global technology and data stack. Dentsu Global Services, based in India, was recognised as a leading global capability centre for AI innovation at the Minsky Awards, one of the country’s largest AI festivals. This recognition aligns with Dentsu’s broader ¥12 billion ($78 million) investment in AI, data and technology for 2025, positioning India as a key hub for new-age capabilities even as the group restructures to navigate international headwinds.

Against this backdrop, Dentsu Group Inc. has upgraded its full-year profit guidance for fiscal year 2025, driven largely by strong performance in Japan. The company reported a 14.1% year-on-year increase in underlying operating profit to ¥111 billion (around $720 million) for the first nine months, delivering a group operating margin of 13.0% and prompting the revised outlook.

In its Q3 earnings release, Dentsu kept its consolidated organic growth forecast broadly flat for the full year but raised underlying operating profit expectations from ¥141.6 billion (around $920 million) to ¥161.2 billion (around $1.04 billion), an increase of 13.8%. Statutory operating profit was revised to a ¥17.6 billion (around $114 million) gain, reversing an earlier projection of a ¥3.5 billion (around $23 million) loss. The net loss forecast was also improved to ¥52.9 billion (around $340 million) from ¥75.4 billion (around $490 million).

Japan remained the growth engine, with organic growth of 6.8% for the nine months and 9.9% in Q3, supported by strong client retention, continued double-digit expansion in internet media for the seventh consecutive quarter, and gains in events and TV media. Net revenue and underlying operating profit in Japan reached record levels, with an operating margin of 24.6% and ten straight quarters of positive growth.

Outside Japan, however, the business came under pressure. The Americas recorded a 3.4% decline in organic growth over nine months, with CXM stabilising but creatives affected by client losses and lower spend. EMEA reported a 1.9% drop, impacted by CXM and creative softness, especially in the UK and Italy, although media held up and Spain grew.

Management attributed the weakness in international markets to macroeconomic uncertainty, client losses in the creative business (with the US accounting for roughly 70% of the decline), reduced budgets from existing clients and adverse foreign exchange movements.

To offset this, Dentsu is pushing ahead with structural reforms and cost efficiencies. The group has targeted cost reductions of ¥50 billion (around $320 million) by 2027, with ¥28 billion (around $180 million) expected to be delivered in FY2025. It is also rolling out its “Media++” strategy, which aims to integrate media with CXM, creatives and data/technology to provide more connected solutions to clients. The company is targeting an operating margin of 16–17% by 2027.

For the nine months, group revenue declined 0.8% to ¥851.3 billion (around $5.5 billion), while net revenue stood at ¥1,014.3 billion (around $6.6 billion), down 1.2% year-on-year. The group reported a statutory net loss of ¥61.5 billion (around $400 million), attributed to one-time factors.

Shares in Dentsu rose modestly in Tokyo trading after the announcement as investors weighed strong Japan numbers and India-led innovation momentum against broader global pressures. The update comes at a time when the global advertising sector is dealing with economic volatility and rapid shifts in client spending, with Dentsu betting on its domestic strength and growth markets like India to drive long-term recovery and margin expansion.