Dentsu Group presented its revised Mid-Term Management Plan on 14 August, extending the time required to stabilise its international business. Under the original plan, by the end of 2026, no market in which the group had cumulatively invested more than ten billion yen was expected to be operating at a loss. That target has now been moved to 2027, while the expectation that all four regions will contribute to increasing shareholder value has been postponed until 2028.
The company has not changed the plan’s overall direction, but has placed profitability and greater financial stability ahead of accelerated growth. In its explanation, it states that the changes have already produced results in parts of the business, including China and Australia returning to profitability in 2025, but that macroeconomic uncertainty will leave some markets operating at a loss this year as well.
The new deadlines accompany a broader programme to simplify the group. Dentsu intends to reduce Global HQ costs by approximately 30 per cent by 2028 compared with the 2026 plan. The closure, sale or consolidation of between 70 and 80 international entities is planned for this year, with a further 50 to 80 potentially affected by 2028. The international network has already been halved compared with January 2021, when it comprised more than one thousand entities.
The headcount reduction programme is also close to its planned scale. In the first half of 2026, headcount was reduced by just under 900, bringing the total to approximately 3,000 of the planned 3,400 job reductions. The company expects operating costs to be more than 50 billion yen lower by 2027.
The results for the first six months show why management decided to extend the reorganisation. Organic net revenue growth at group level amounted to only 0.3 per cent. Japan grew and remained the most stable source of profit, while the Americas, EMEA and APAC recorded organic declines. In the second quarter alone, the group’s organic result was negative 0.2 per cent, according to Dentsu’s quarterly data.
The differences between regions are also visible in the roles the company assigned to them in the new plan. Japan remains the group’s core and a base for expanding services beyond marketing and communications. The Americas is expected to be the main growth engine, supported by the media business and customer experience transformation. EMEA has been identified as a region requiring a turnaround, with consolidated operations and a simpler operating model. APAC is expected to become the next growth base, but only after portfolio rationalisation and the allocation of investment to markets with greater potential.
In the Americas, Dentsu points to an insufficiently robust media business pipeline and increasingly intense competition for major clients. EMEA is facing a decline in market share across key markets and a fragmented approach to service delivery. In APAC, the company sees room for stronger cooperation between markets and the development of its offering in data, social media and commerce.
At first glance, the group’s financial result indicates a strong recovery. Dentsu recorded an operating profit of 83.9 billion yen in the first half of the year, following a loss of 36.5 billion yen in the same period last year. Profit attributable to owners of the parent amounted to 46.3 billion yen, compared with a loss of 73.7 billion yen last year.
The comparison, however, was strongly influenced by the fact that last year’s result included significant impairment losses related to the business in the Americas and EMEA. This year’s reported result also benefited from the sale of an office building in Tokyo’s Ginza district. Underlying operating profit, a measure through which the company seeks to separate recurring business performance from one-off items, increased much more moderately to approximately 72 billion yen.
By 2028, Dentsu is targeting an operating margin of 16 per cent and organic growth of between two and three per cent. Investments will primarily be directed towards media, data, technology and the application of artificial intelligence, while part of the savings generated at Global HQ will be redirected to those areas. At the same time, it will maintain a selective approach to acquisitions and consider restructuring or exiting unprofitable markets regardless of the capital previously invested in them.
The company has maintained its existing forecast for the whole of 2026. The new President and Global CEO, Takeshi Sano, who led the group’s profitable Japanese business before taking over the group, will have to bring the international network’s results closer to the standard already achieved by Japan over the next two years. Only after stabilising its balance sheet and profitability does Dentsu plan to return to a more balanced allocation of capital and resume dividend payments “at the earliest timeline”, as stated in the updated Mid-Term Management Plan.
