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Dentsu : Q1 FY2026 Questions and Answers（130KB）
Dentsu : Q1 FY2026 Questions and
About this update from Dentsu Group Inc.
Dentsu Group Financial Results for Q1 FY2026 Questions and Answers Date: May 15, 2026 (Friday) Hosts: Takeshi Sano, President & Global CEO, dentsu, CEO, dentsu Japan Shigeki Endo, Global CFO, dentsu Questioner 1: My first question is with regard to advertising demand. You said there is a rise in geopolitical risks. By region, have you already seen any impact on advertising demand? My second question, in EMEA and Australia, initiatives will be launched. What were the challenges that you have identified? Can you elaborate? Also, cost reduction impact was cited. Have they already been factored in the numbers that you have already disclosed? Sano: For your first question, regarding the geopolitical risks, more specifically in the Middle East, there is certain impact, but in the overall business, the Middle East in itself occupies a very small proportion, so it does not have any significant impact on our business. As far as other areas, including Japan, there is a moderate rise in concern, and we are sensing some signs of risk rising. More specifically, oil prices are rising, and manufacturers and companies in all sectors are being psychologically affected, so there is a mood of hesitancy. In April, we began to sense such hesitation. It's not that significant, but there seem to be signs of caution among advertisers globally. Coming to your second question regarding EMEA and ANZ. First of all, EMEA covers a very broad region from the Nordic countries to Africa. There are seven clusters, each with its own headquarters, which resulted in redundancies. In order to improve efficiency, we believe it is important to reduce the overlap of EMEA headquarter functions. At the same time, this initiative is intended to bring us closer to clients across EMEA and accelerate decision-making. Also, it has the effect of cost reduction. We've been speaking about cost reduction initiatives, and this initiative of streamlining EMEA headquarter has not been included in our previously disclosed figures, so this will be an additional initiative. As far as Australia and New Zealand are concerned, the Media business is robust, but for some of the CXM business, as I said, Salesforce-related business, the profitability wasn't high, and the synergy with the Media business was not so significant. That is why we decided on the divestiture. In last year's financial results, we talked about Australia and China turning from losses to profitable on an underlying operating profit basis. As a part of that, some had already been factored in, but additional cost reductions will be reflected going forward. Endo: You touched upon ANZ. The cost impact related to ANZ will not be included in the "business transformation cost". Questioner 2: The first question is, when you talked about concentrated agility and collaboration, in the International business context, apart from the initiatives that you've announced, where are the challenges? Under what type of framework or schedule do you intend to implement these changes? The second question is, in terms of the competitiveness of the International business, the position of the Big Three has strengthened. Based on what you have announced, are you going to continue to operate on an organic basis to strengthen your competitiveness rather than forming a partnership? Sano: Your first question is regarding agility, collaboration and so forth. We're going to do this both at the organizational level and at the level of individual employee behavior. So we are going to do what we can do, as we have announced in February. Until now, each regional CEOs reported to the Global COO and then reported to me, the Global CEO. Also, heads of each practice, the presidents, reported to the overall Global practice President, who in turn reported to the Global CEO. This was discontinued. Now, all the reporting lines come directly to me. We aim to create a flat organization as much as possible. Also, reducing functions and decision-making related to functions did require time, so that will also be reduced. What our organization can do will be done at the organizational level. On top of that, we want every employee to act with greater agility, so that is what we have been talking about. The other part, on the collaboration, a number of the items that we have explained today also relate to your second question. Compared to the so called Big Three, we are slightly smaller in size, but we have been able to win large global pitches. The reason for that lies here. Despite the fact that we are Media-centered, we also have capabilities in technology, CXM, and Creative. With strong expertise in these areas, we are able to make proposals as a fully integrated Group, which has led to us winning these pitches. By breaking the internal silos, we are going to establish KPIs as an organization, but we want to make sure that this also becomes part of our behavioral principles. In short, organizational structure, KPIs, and guiding principles, all of these areas will be subject to collaboration. Your second question is how we are going to compete with the Big Three. There was an article in the Campaign yesterday or today about this. If we were competing on scale alone, we would inevitably lose. However, when you look at the results, we are still winning the major global pitches, and so this is the proof. Clients, to a certain extent, may see value in scale, but more than that, the value that we provide is what they make a decision on, and the value we provide and the solutions that we offer. When I actually talk with the clients, we often talk about teams. When I ask why they chose us, they often say that they chose us as a team, so the chemistry between our team and the client team. If it is a 30-person team, then collaboration within that team, the strength of the team becomes important. I think that enables us to win. As I've explained earlier, rather than waiting to be briefed from clients, we intend to proactively take the initiative, accelerate the speed, and understand our clients' challenges before they realize them, which will lead to wins. In that regard, agility is required. Also, the term "partners" is quite broad. We're not thinking of partners like funds, even though that may be what you have in mind, at least at this stage. With regard to potential technology partners, this would be an area that we will be more proactive in considering, for example, Adobe or Salesforce. They are our clients, but they are also technology partners that we are working with, and so enhancement of partnership with these entities is something that we intend to strengthen going forward. Questioner 3: I have two questions. You have just mentioned potential technology partners, and these partners are using AI on their platforms and are engaged in new initiatives. Outside of the conventional advertising business, AI could be used. Do you have capabilities in such areas? Can we expect that to be a new growth domain? How will you be leveraging such AI capability? The second question is about APAC organic growth. Your full-year guidance remains unchanged, but on the surface, you seem to be behind. Are you confident that you will be able to catch up? Are there specific grounds on which you are maintaining the guidance? It's small in comparison to other regions, so the variance may become large. Even if APAC is behind, the impact on the total business may be insignificant. Is the guidance maintained partly based on optimistic assumptions, or do you have factors behind that make you confident to achieve the guidance? which has Sano: For your first question, the short answer is yes. Lately, we have published a press release. More specifically, through a partnership with Microsoft, data from companies using Microsoft 365 will be leveraged, and we will discover silos within companies and enable the companies to better use human resources. This is called "HR for Growth". This is an example of AI not just being used for the advertising area alone, but for all other areas to help our clients. This kind of initiative has been done in Japan, but we're trying to replicate such initiatives in other markets outside of Japan. For your second question, just because the region is small, we're not attaching importance to it - that's not the case. I can't disclose details at this point, but we have won a few competitive pitches, so to a certain extent, we have grounds for confidence in achieving our target.