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Earnings presentation4324DENTSU GROUP INC.Information and Communications, Services and Others

Second-Quarter Financial Results Briefing Materials for Fiscal 2026

In the second quarter of FY2026, consolidated gross profit and adjusted operating profit exceeded the year-earlier levels, while operating profit and profit for the period also turned positive. The full-year forecast remains unchanged overall from the February disclosure, while the outlook for organic growth by region has been updated and the medium-term management plan has been redesigned as a plan for FY2026–FY2028.

Worth reading
89Important
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Direction
Mixed performance
Direction inferred from the company’s description.
Scale
4.5
¥ billions (year-on-year change in adjusted operating profit for the first half)
Wording
Conditional
How definitive the wording is.

Contents of this document

Earnings presentationFY2026 second quarter8 items taken from the company’s own explanation
Financial Results Figures (The key points of this material are explained below)
Net Sales¥3,294.9 billion+10.9%
Operating profit¥72 billions +6.6%adjusted operating profit
Net income¥46.3 billions profit for the period
Operating profit margin12.3 % operating margin
Results for the three months of the current quarter
Net Sales
¥1,666.6 billions +11.9%revenue; turnover
Revenue
¥360.2 billion+6.3%
Gross profit
¥288 billion+4.8%
Adjusted operating profit
¥34.2 billion+1.7%
Operating margin
11.9 %
yoy_change_points-40
Profit for the period
¥6.1 billion
Full-year earnings forecast
Organic growth rate
0〜1
Revenue
¥1,491.5 billion
Gross profit
¥1,230.2 billion
Adjusted operating profit
¥166.3 billion
Operating margin
13% range
Adjusted net income
¥85.2 billion
Basic adjusted profit per share
¥328.21
Operating profit
¥152.6 billion
Profit for the period
¥69.7 billion
What the company explained in this material
Self-assessment against the planThe company's self-assessment against its own plan.
Some regions were slightly below expectations, while the other regions were broadly in line with expectations
Breakdown of Factors Affecting the ChangeReasons cited by the Company for the change in the figures.
  • Change in gross profit¥12.7 billion
  • Change in personnel expenses¥-9.9 billion
  • Change in operating expenses¥-0.7 billion
  • Depreciation¥2.5 billion
  • Foreign Exchange Effects¥-0.1 billion
Assumptions Underlying the Business OutlookThe assumptions used by the company in preparing its forecast.
  • JPY/USD156.7 JPY January 2026 average
  • JPY/GBP211.9 JPY January 2026 average
  • Organic growth rate by regionJapan: slightly above 3%; Americas: approximately -4%; EMEA: approximately 1%; APAC: approximately 1%
New initiatives
  • Redesign of the medium-term management plan as a plan for FY2026–FY2028
  • Launch of the AI For Growth Suite
  • Relaunch of 360i in the United States as an AI-native brand
  • Building an influencer marketing platform through a partnership between dentsu UK&I and Meta
  • International rollout of a consumer AI persona-based research tool originating in Japan
  • Sale of Dentsu Tracking
Key KPIsA metric the company considers important as a management benchmark.
  • Organic growth rate (Group, first half)0.3 %
  • Organic growth rate (Group, second quarter)-0.2 %
  • Operating margin (Group, first half)12.3 %
    Year on year against the same period last year+30bps
  • AI transformation support delivered300 Engagements
  • AI transformation support target1,000 cases by the end of FY2026
  • Annual hours of work created to date107,000 hours or more FY2025
  • Projected annual hours of work created200,000 hours or more FY2026
  • Cannes Lions awards won15 Award
Segment results
  • Japan
    Gross profit¥235.9 billion (YoY -0.3%)
    Adjusted operating profit¥60.4 billion (YoY +3.6%)
  • Americas
    Gross profit¥156.1 billion (YoY +1.5%)
    Adjusted operating profit¥29.4 billion (YoY -11.8%)
  • EMEA
    Gross profit¥138 billion (YoY +13.7%)
    Adjusted operating profit¥12.1 billion (YoY +113.1%)
  • APAC
    Gross profit¥49.6 billion (YoY +5.1%)
    Adjusted operating profit¥-3.2 billion
Medium-term management plan targets
  • TargetMore than ¥50 billion in operating cost reductions
    Target fiscal yearFY2027
  • TargetApproximately 30% reduction in global HQ costs (versus the FY2026 plan)
    Target fiscal yearFY2028
  • TargetZero loss-making markets
    Target fiscal yearFY2027
  • TargetAll 4 regions contributing to increased shareholder value
    Target fiscal yearFY2028
  • Target16% operating margin
    Target fiscal yearFY2028
  • Target2–3% organic growth rate
    Target fiscal yearFY2028
Number of employees
Change during the periodJust under 900 employees reduced; approximately 3,000 employees (88%) of the 3,400 planned through FY2027 have been completed
Contents of this document
ItemDetails
Document typeEarnings presentation
Fiscal Period CoveredFY2026 second quarter
Net Sales¥3,294.9 billion (YoY +10.9%)
Operating profit¥72 billions (adjusted operating profit) (YoY +6.6%)
Net income¥46.3 billions (profit for the period)
Operating profit margin12.3 % (operating margin)
Results for the three months of the current quarterNet Sales ¥1,666.6 billions (revenue; turnover) (YoY +11.9%) / Revenue ¥360.2 billion (YoY +6.3%) / Gross profit ¥288 billion (YoY +4.8%) / Adjusted operating profit ¥34.2 billion (YoY +1.7%) / Operating margin 11.9 % / Profit for the period ¥6.1 billion
Full-year earnings forecastOrganic growth rate 0〜1 / Revenue ¥1,491.5 billion / Gross profit ¥1,230.2 billion / Adjusted operating profit ¥166.3 billion / Operating margin 13% range / Adjusted net income ¥85.2 billion / Basic adjusted profit per share ¥328.21 / Operating profit ¥152.6 billion / Profit for the period ¥69.7 billion / Dividend per share Not disclosed
Self-assessment against the planSome regions were slightly below expectations, while the other regions were broadly in line with expectations
Segment resultsSegment Japan / Gross profit ¥235.9 billion (YoY -0.3%) / Adjusted operating profit ¥60.4 billion (YoY +3.6%), Segment Americas / Gross profit ¥156.1 billion (YoY +1.5%) / Adjusted operating profit ¥29.4 billion (YoY -11.8%), Segment EMEA / Gross profit ¥138 billion (YoY +13.7%) / Adjusted operating profit ¥12.1 billion (YoY +113.1%), Segment APAC / Gross profit ¥49.6 billion (YoY +5.1%) / Adjusted operating profit ¥-3.2 billion
Breakdown of Factors Affecting the ChangeFactors Change in gross profit / Amount ¥12.7 billion, Factors Change in personnel expenses / Amount ¥-9.9 billion, Factors Change in operating expenses / Amount ¥-0.7 billion, Factors Depreciation / Amount ¥2.5 billion, Factors Foreign Exchange Effects / Amount ¥-0.1 billion
Key KPIsIndicator name Organic growth rate (Group, first half) / Value 0.3 % / Year on year against the same period last year Not disclosed, Indicator name Organic growth rate (Group, second quarter) / Value -0.2 % / Year on year against the same period last year Not disclosed, Indicator name Operating margin (Group, first half) / Value 12.3 % / Year on year against the same period last year +30bps, Indicator name AI transformation support delivered / Value 300 Engagements / Year on year against the same period last year Not disclosed, Indicator name AI transformation support target / Value 1,000 cases (by the end of FY2026) / Year on year against the same period last year Not disclosed, Indicator name Annual hours of work created to date / Value 107,000 hours or more (FY2025) / Year on year against the same period last year Not disclosed, Indicator name Projected annual hours of work created / Value 200,000 hours or more (FY2026) / Year on year against the same period last year Not disclosed, Indicator name Cannes Lions awards won / Value 15 Award / Year on year against the same period last year Not disclosed
Number of employeesNumber of Employees Not disclosed / Change during the period Just under 900 employees reduced; approximately 3,000 employees (88%) of the 3,400 planned through FY2027 have been completed
Assumptions Underlying the Business OutlookIndicator JPY/USD / Value 156.7 JPY (January 2026 average), Indicator JPY/GBP / Value 211.9 JPY (January 2026 average), Indicator Organic growth rate by region / Value Japan: slightly above 3%; Americas: approximately -4%; EMEA: approximately 1%; APAC: approximately 1%
Medium-term management plan targetsTarget More than ¥50 billion in operating cost reductions / Target fiscal year FY2027, Target Approximately 30% reduction in global HQ costs (versus the FY2026 plan) / Target fiscal year FY2028, Target Zero loss-making markets / Target fiscal year FY2027, Target All 4 regions contributing to increased shareholder value / Target fiscal year FY2028, Target 16% operating margin / Target fiscal year FY2028, Target 2–3% organic growth rate / Target fiscal year FY2028
New initiativesRedesign of the medium-term management plan as a plan for FY2026–FY2028, Launch of the AI For Growth Suite, Relaunch of 360i in the United States as an AI-native brand, Building an influencer marketing platform through a partnership between dentsu UK&I and Meta, International rollout of a consumer AI persona-based research tool originating in Japan, Sale of Dentsu Tracking
Items this document does not state (15)
Ordinary incomeGross Profit MarginSelling, general and administrative expensesProgress against full-year forecastUnit price and quantity metricsNumber of stores and locationsRisk amount incorporated into the outlookFinancial targetsAnnual DividendPayout ratioAcquisition of treasury sharesCapital expendituresOrders received and order backlogMarket Size / ShareKey points of the Q&A

These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.

The reasons the company gives

The company's own explanation, not something inferred from the numbers.

The increase in adjusted operating profit for the first half was attributed to a ¥12.7 billion increase in gross profit and a ¥2.5 billion reduction in operating expenses, among other factors. Personnel expenses, however, increased by ¥9.9 billion. By region, the improvement in profitability in EMEA and APAC was attributed to SG&A cost controls, while the underperformance in the Americas was attributed to factors including client losses in the previous year.

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Second-Quarter Financial Results Briefing Materials for Fiscal 2026 | DENTSU GROUP INC. (4324) timely disclosure | Komori