Dentsu Aegis profits: Australia top 5 market, Q4 lifts after weaker earlier in year

The international business, Dentsu Aegis Network, delivered total gross profit growth of 17.1%

In FY2017 the Dentsu Group has reported global total gross profit growth of 9.2% (constant currency basis) and organic gross profit growth of 0.1%.

Highlights as reported by the company:

• FY2017 saw Dentsu in Japan deliver a resilient performance against the backdrop of a challenging market. While the market continued the transition to digital media, Dentsu in Japan remained focused on further developing its digital capabilities to offer clients new opportunities for consumer engagement and growth.

• The international business, Dentsu Aegis Network, delivered total gross profit growth of 17.1% with a record year for net new business: $5.2bn of net new media billings. This success will drive above peer group average organic growth in FY2018.

• In FY2017, Dentsu Aegis Network made a total of 31 acquisitions and investments to accelerate its growth strategy.

Corina Cosma GM, Melbourne at dentsu X; James Hawkins – MD APAC, dentsu X; Simon Ryan – CEO, Dentsu Aegis Network ANZ

Regionally, the Americas contributed 40% of Dentsu Aegis Network gross profit, EMEA 35% and APAC excluding Japan 25%. The continued expansion and diversification of the global gross profit footprint is evidenced by double digit growth (at constant currency) in countries such as India, Russia, Malaysia, Denmark, Poland and Sweden.

In APAC excluding Japan, Dentsu Aegis Network delivered organic gross profit decline of 0.6% in FY2017, including a growth of 2.6% in Q4 FY2017.

The Q4 FY2017 showed a strong performance in Australia, one of our top five markets, after a weaker Q2 and Q3.

WATCH: Dentsu Aegis CEO Simon Ryan on Mediaweek TV, Nov 30 217

China remained a challenging market, our exposure to Western and Japanese clients remained solid but reduced spend by local clients continued. Recent management changes in China will strengthen our position going forward.

Guidance for Dentsu Aegis Network for FY2018 is low to mid-single digit organic gross profit growth. We expect to return to outperforming the peer group in FY2018 driven by our strong new business performance. Further margin moderation is expected in FY2018 at Dentsu Aegis Network as planned investments to support business growth continue. Margin growth is expected from FY2019 onwards.

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