Dentsu slides as profits expected to fall
TOKYO - Dentsu, the Japanese advertising giant, saw its share price fall today, after news that it is expected to report a 14% fall in its pre-tax profits when it posts its full-year results.
The Japanese press has reported that sources close to Dentsu say that pre-tax profit will come in at £272m, blaming the fall on budget cuts from clients in the information and communications sectors. According to reports, group turnover is likely to fall by 2% to £9.1bn. Shares in Dentsu, listed on the Tokyo Stock Exchange, closed down by 0.28% yesterday at Y715,000.
It is also suggested that revenues from the upcoming World Cup, widely tipped to be the saviour of the Asian advertising industry, are unlikely to make up for the losses in revenue. Added to this, consumer goods advertisers, which have traditionally been the resilient spenders during recessionary times, are not thought to be increasing adspend.
The agency is also likely to be hit by costs involved in moving its head office, scheduled for November this year. It refused to comment on the stories until it posts its results on May 15.
Dentsu is the biggest agency group in Japan and handles 25% of all the advertising in that market, the second largest in the world.
It is set to take a 15% stake in the merged Publicis and B|Com3 group having previously held a stake in B|Com3.
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