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Dentsu : FY2016 Earnings Presentaion

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02/16/2017 | 02:17am CET
FY2016 Earnings Presentation

February 16, 2017 DENTSU INC.

FY2016 Annual Results

Shoichi Nakamoto,

Representative Director and Senior Executive Vice President & CFO

February 14, 2017

  • Please be reminded that the figures shown in this presentation may be different from those shown in the financial statements as this presentation has been

    prepared for investors to understand our businesses. Please refer to the annotations in the Appendices for each definition of the indicators.

    Highlights

    • Gross profit increased by 11.3% (YoY, constant currency basis)

    • Organic gross profit growth: +5.1% (Japan +4.5% / International +5.7%)

    • Underlying operating profit increased by 9.4% (constant currency basis)

    • Underlying operating margin: 21.1%, -40 bps (constant currency basis)

    • Underlying basic EPS increased by 0.1%

    • Dividend increased by 13%(YoY) to 85 yen per share

1

Summary

2016

Jan-Dec

2015

Jan-Dec

YoY %

Constant currency basis %

Forecast (announced in May 2015)

(JPY mn)

Forecast variance %

Turnover

4,924,933 4,990,854 (1.3) - - -

Revenue

Gross profit

Underlying operating profit

Operating margin

Underlying net profit

Underlying basic EPS

838,359

789,043

166,565

21.1%

112,972

396.20 yen

818,566

+2.4

-

761,996

+3.5

+11.3

160,438

+3.8

+9.4

21.1%

+0.0

(0.4)

113,388

(0.4)

-

395.67 yen

+0.1

-

817,200

+2.6

768,700

+2.6

155,000

20.2%

+7.5

+0.9

104,500

366.5 yen

+8.1

+8.1

Operating profit

Net profit

EBITDA

Underlying ROE

137,681

83,501

184,064

11.3%

128,212

+7.4

-

83,090

+0.5

-

175,454

+4.9

-

10.6%

+0.7

-

132,400 +4.0

81,200 +2.8

Jan-Dec average

Jan-Dec average

at May 4th, 2016

JPY/USD

108.9 yen

121.0 yen

(10.1)

- 106.1 yen

+2.6

JPY/GBP

147.8 yen

185.1 yen

(20.2)

- 155.4 yen

(4.9)

Currency

2016

2015

Note: 2

Net profit, underlying net profit and underlying basic EPS… Excluding attribution to non-controlling interests

Gross Profit Growth

(JPY)

761.9 bn

-53.2 bn

+41.7 bn

Organic growth

+5.1%

Gross profit after currency & acquisitions adjustment

750.4bn

+38.5 bn

  1. bn

    3

    Regional Information - Gross Profit -

    (JPY mn)

    2016

    Jan-Dec

    348,252

    +4.3

    +4.3

    +4.5

    18.9%

    +0.8

    +0.8

    Japan 363,242

    Digital domain ratio 19.7%

    2015

    Jan-Dec

    YoY %

    Constant currency basis %

    Organic growth

    %

    EMEA

    Americas

    APAC

    International total

    Digital domain ratio

    151,195

    160,043

    114,775

    426,014

    52.3%

    157,153 (3.8) +12.6

    +6.9

    139,358 +14.8 +28.9

    +3.1

    117,554 (2.4) +12.2

    +7.9

    414,066 +2.9 +18.1

    +5.7

    46.5% +5.8 +5.6

    Consolidation adjustments

    (213)

    (323)

    - - -

    Dentsu consolidated total

    789,043

    Digital domain ratio

    37.3%

    International business ratio

    54.0%

    761,996

    +3.5

    +11.3

    +5.1

    33.9%

    54.3%

    +3.4

    (0.3)

    +4.2

    +3.1

    4

    Regional Information - Underlying Operating Profit -

    (JPY mn)

    Underlying operating profit

    2016

    Jan-Dec

    Constant

    2015

    YoY % currency

    Jan-Dec

    basis %

    Operating margin

    2016

    Jan-Dec

    Constant

    2015

    YoY % currency

    Jan-Dec

    basis %

    Japan

    97,362

    90,403

    +7.7

    +7.7

    26.8%

    26.0%

    +0.8

    +0.8

    International total

    69,059

    70,156

    (1.6)

    +11.2

    16.2%

    16.9%

    (0.7)

    (1.0)

    Consolidation adjustments

    143

    (121)

    -

    -

    -

    -

    -

    -

    Dentsu consolidated total

    166,565

    160,438

    +3.8

    +9.4

    21.1%

    21.1%

    +0.0

    (0.4)

    5

    Change in Underlying Operating Margin

    2015

    Jan-Dec

    Japan margin change

    International margin change

    Currency

    Consolidation adjustments, etc.

    2016

    Jan-Dec

    21.1%

    21.1%

    +0.4%

    -0.2%

    +0.4%

    -0.5%

    6

    Operating Margin

    Dentsu consolidated

    Japan International

    35.0%

    30.0%

    25.0%

    23.6%24.2%

    26.0%

    26.8%

    20.0%

    20.4% 19.7%

    21.1%

    21.1%

    15.0%

    16.7%

    15.3%

    16.9%

    16.2%

    10.0%

    5.0%

    0.0%

    (Apr-Mar) Jan-Dec Jan-Dec Jan-Dec

    FY2013 2014 2015 2016

    7

    Reconciliation from Underlying OP to Statutory OP

    (JPY mn)

    2016

    Jan-Dec

    2015

    Jan-Dec

    YoY # YoY %

    Underlying operating profit

    166,565

    160,438

    + 6,127 +3.8

    Adjustment items

    Amortization of M&A related intangible assets

    Acquisition costs One-off items

    Gain (loss) on sales and retirement of non-current assets

    Gain (loss) on sales of shares of subsidiaries and associates Revaluation gain (loss) on investment reclassification Impairment loss

    Special retirement expenses

    Loss on liquidation of subsidiaries and associates Others

    (28,883)

    (24,506)

    (3,579)

    (798)

    + 6,074

    + 11

    + 339

    (522)

    (5,183)

    -

    (1,517)

    (32,226)

    (22,798)

    (1,624)

    (7,803)

    (874)

    + 954

    + 3,260

    (3,650)

    (4,564)

    (2,617)

    (312)

    + 3,342

    (1,707)

    (1,955)

    + 7,005

    + 6,949

    (942)

    (2,921)

    + 3,128

    (618)

    + 2,617

    (1,205)

    Operating profit 137,681 128,212 + 9,469 +7.4

    8

    Statutory Operating Profit to Net Profit

    (JPY mn)

    2016

    Jan-Dec

    2015

    Jan-Dec

    YoY # YoY %

    Operating profit

    Share of results of associates

    Profit before interest and tax

    Net finance income (costs)

    Finance income Finance costs

    Profit before tax

    Income tax expense

    Net profit

    Attributable to owners of the parent

    Attributable to non-controlling interests

    137,681

    3,362

    141,044

    (8,126)

    5,104

    13,230

    132,918

    43,572

    89,345

    83,501

    5,844

    128,212

    4,515

    132,727

    (5,988)

    5,993

    11,982

    126,739

    37,637

    89,101

    83,090

    6,011

    + 9,469

    +7.4

    (1,153)

    (25.5)

    + 8,316

    +6.3

    (2,137)

    (889)

    + 1,248

    -

    (14.8)

    +10.4

    + 6,178

    +4.9

    + 5,935

    +15.8

    + 243

    +0.3

    + 411

    +0.5

    (167)

    (2.8)

    9

    Cash Flow

    (JPY mn)

    2016

    Jan-Dec

    Profit before tax

    132,918

    Share of results of associates

    (3,362)

    Depreciation and amortization

    45,860

    Impairment loss

    522

    Others

    1,880

    Income taxes paid

    (39,080)

    Cash flow from operations before change in WC ⅰ

    138,737

    10

    Use of Cash

    (JPY mn)

    2016

    Jan-Dec

    Change in WC ⅱ

    4,847

    Payments for PPE, intangible assets and investment property (net)

    (10,227)

    Payments for investing activities (net)

    (155,387)

    Dividends paid to shareholders

    (22,811)

    Dividends paid to non-controlling shareholders

    (4,121)

    Use of cash ⅲ

    (192,547)

    Effect of exchange rate changes and others ⅳ

    (21,766)

    Change in net cash ⅰ (preceding slide)+ⅱ+ⅲ+ⅳ

    (70,727)

    (Acquisition payments)

    Initial payments

    (144,178)

    Earn-out payments / Additional acquisition payments

    (32,334)

    Proceeds from sales

    4,960

    Notes: "Payments for PPE (property, plant and equipment), intangible assets and investment property (net)" and "Payments for investing activities (net)" are shown as net figures of payments and proceeds by disposal of PPE/intangible assets/investment property and businesses/subsidiaries. "Payments for investing activities (net)" includes proceeds from sales of securities of JPY 40.4bn such as Recruit HD.

    Effect of exchange rate changes and others… Including effect of exchange rate changes from debt and net cash 11

    that acquired companies had held.

    Net Debt

    (JPY mn)

    2016

    End of Dec

    Total debt 403,599

    Cash and cash equivalents 242,410

    Net debt 161,188

    2015

    End of Dec

    Var. #

    Total debt (LTM average)

    Cash and cash equivalents (LTM average) Net debt (LTM average)

    367,196

    241,866

    125,329

    353,783

    263,322

    + 49,816

    (20,911)

    90,460

    + 70,727

    380,689 (13,493)

    271,719 (29,852)

    108,970 + 16,359

    EBITDA (LTM)

    184,064

    175,454 + 8,610

    Net debt / EBITDA (LTM) 0.88 0.52

    Net debt (LTM average) / EBITDA (LTM) 0.68 0.62

    12

    Note: LTM… Last twelve months

    FY2017 Forecast

    (JPY mn)

    Revenue

    Gross profit

    Japan International total

    Underlying operating profit

    Japan International total

    Operating margin

    Japan International total

    Underlying net profit

    Underlying basic EPS

    Operating profit

    Net profit

    2017

    Jan-Dec

    978,500

    929,500

    360,400

    569,100

    168,900

    81,200

    87,700

    18.2%

    22.5%

    15.4%

    111,800

    392.09 yen

    151,500

    86,600

    2016

    Jan-Dec

    YoY %

    Constant

    currency basis %

    838,359

    +16.7

    -

    789,043

    +17.8

    +15.8

    363,242

    (0.8)

    (0.8)

    426,014

    +33.6

    +29.5

    166,565

    +1.4

    (0.5)

    97,362

    (16.6)

    (16.6)

    69,059

    +27.0

    +21.1

    21.1%

    (2.9)

    (3.0)

    26.8%

    (4.3)

    (4.3)

    16.2%

    (0.8)

    (1.1)

    112,972

    (1.0)

    -

    396.20 yen

    (1.0)

    -

    137,681

    +10.0

    -

    83,501

    +3.7

    -

    Currency

    Av. Jan in 2017

    Av. Jan-Dec in 2016

    JPY/USD

    114.8 yen

    108.9 yen

    +5.4

    -

    JPY/GBP

    141.6 yen

    147.8 yen

    (4.2)

    -

    Note: 13

    Net profit, underlying net profit and underlying basic EPS … Excluding attribution to non-controlling interests

    Capital Management Strategy

    Objective: to deliver an improvement in Shareholder Value over time

    Growth of the business - priority for capital deployment:

    • Investing in growth in Japan and globally

    • Deliver value-enhancing acquisitions - scale, in-fill & innovation

    • Short-term investment for business infrastructure in Japan from 2017

      Focus on Capital Returns and Dividends

    • Share repurchase up to the maximum amount of JPY20bn in 2017 (Total payout ratio forecast in 2017: 41%)

Increase ROE overtime 14

Dividend

100

90

80

70

60

75

(35)

55

85

(40)

90

(45)

40.0%

30.0%

50

4033

(16)

30

2010.8%

(20)

17.1%

19.0%

21.5%23.0%

20.0%

10.0%

10

0

FY2013

actual

FY2014

actual

2015

Jan-Dec

actual

2016

Jan-Dec

actual

2017

Jan-Dec

forecast

0.0%

Notes:

Annual dividend per share Payout ratio

Payout ratio… Based on underlying net profit attributable to owners of the parent 15

( )… Interim dividend per share

Forward-Looking Statements

Disclaimer

This presentation contains statements about Dentsu that are or may be forward-looking statements. All statements other than statements of historical facts included in this presentation may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or, words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: information on future capital expenditures, expenses, revenues, earnings, synergies, economic performance, and future prospects.

Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof.

Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation

ⅰ Risk related to fluctuations in the economic and business environment ⅱ Risk related to structural changes in the media

ⅲ Risk related to our ability to realize our financial targets

ⅳ Risk related to common business practices

ⅴ Risk related to competition among advertising agencies

ⅵ Risk related to the development of systems and databases ⅶ Risk related to legal or regulatory changes

ⅷ Risk of litigation

Dentsu disclaims any obligation to update any forward-looking or other statements contained herein, except as required by applicable law.

Previous year's figures in the Consolidated Statement of Income

The previous year's figures are provided on a December year-end basis, although the fiscal year-end had not yet changed in the same 16

period of the previous year.

Current Status & Outlook for the Dentsu Group

Toshihiro Yamamoto

President & CEO

This presentation material contains forecasts based on assumptions, prospects and plans about the future of the management as of February16, 2017. Actual results may significantly differ from the forecasts, depending on risks and uncertainties related to the economic situation.

February 2017

Progress of Medium-Term Management Plan "Dentsu 2017 and Beyond"

17

"Dentsu 2017and Beyond"

Strategic goals> Diversifying the portfolio on a global basis Evolving and expanding in the digital domain

Re-engineering business processes and improving profitability Further reinforcing the business platform in the core Japanese market

KPIs

Organic gross profit growth 3 - 5%

Ratio of gross profit from international (non-Japanese) business 55% Ratio of gross profit from the digital domain 35% Underlying operating margin 20% or higher

"Dentsu 2017 and Beyond" KPIs & Progress

Outperforming both the market and our global peers both domestically and internationally

(billion yen)

900

800

700

600

500

549

677

7.1%

5.8%

762789

5.1%

Continuing strong international growth on top of growth in Japan

FY2012 FY2016

54

19

"Dentsu 2017 and Beyond" KPIs & Progress

Grown significantly with strategic M&As

FY2012

37

FY2016

Underlying Operating Margin

Improving consistently both in Japan and internationally

20

New Medium-term Outlook and Management Focus for the Dentsu Group

21

Clear and focused objectives for our leadership

Accelerate growth in international business and expand/enhance

competitive platform

Foster a strong and supportive culture for our people and leaders to drive sustainable growth in Japan

Leverage innovation and digital capabilities to deliver value to our

clients

Evolve our leadership team to focus on each stakeholder's interests and social responsibilities

22

Medium-term Outlook and Management Focus for the Dentsu Group

Accelerate growth in international business and expand/enhance competitive platform

Sustain brisk growth momentum and actively tap into business opportunities

Maintain the growth momentum based on strong and stable leadership

Drive dynamic M&As to take on changes in advance, focused on digital capabilities in-fill, particularly with data

Transform our propositions to clients through innovation to enhance the

organic growth

23

Medium-term Outlook and Management Focus for the Dentsu Group

Foster a strong and supportive foundation for our people and leaders to drive sustainable growth in Japan

Evolve into a cutting-edge corporate group that creates new styles of

working

Carry out structural reforms that will improve the working environment in the Japan business

Create a system that will ensure the effectiveness of reforms

Introduce agile working styles to encourage our people to reflect changes in society and the economy and to drive innovation

Nurture a corporate culture that emphasize diversity inside and outside the group, to drive creativity to get better results for our people and clients

24

Medium-term Outlook and Management Focus for the Dentsu Group

Leverage innovation and digital capabilities to deliver value to our clients

Transform and strengthen our competences to advance digitalization

Upgrade our accountability and capabilities for proposals and implementation that center around data

Strengthen our abilities to create a unique brand experience that is carried out in

real time

Redesign operational processes by utilizing various technologies

Actively incorporate cutting-edge knowhow obtained from sources in Japan and abroad, and reinforce partnerships

25

Medium-term Outlook and Management Focus for the Dentsu Group

Evolve our leadership team to focus on each stakeholder's interests and social responsibilities

Implement well-balanced group management to achieve sustainable

growth

Contribute to the development of society through the implementation of diverse measures

  • Realize interests of each stakeholder, shareholder/investor, business partner and

    our people

    Establish a governance system to ensure transparency and sound management

    26

    Dentsu Group Moves Toward the Future

    Transforming into a self-innovative corporate group that consistently reinvents itself to achieve growth and evolution

    The Dentsu Group aims to continually maximize its corporate value by nurturing its culture and dynamism to improve the quality of its services

    and the competency of its employees

    Appendices

    1. Definition

    • Turnover: The gross amounts billable to clients handled by the Group on behalf of clients, with net of discounts, VAT and other sales-related taxes

    • Underlying operating profit: KPI to measure recurring business performance which is calculated as operating profit added with amortization of M&A related intangible assets, acquisition costs and one-off items such as impairment loss and gain/loss on sales of non-current assets

    • Operating margin: Underlying operating profit divided by gross profit

    • Underlying net profit (attributable to owners of the parent):

      KPI to measure recurring net profit attributable to owners of the parent which is calculated as net profit (attributable to owners of the parent) added with adjustment items related to operating profit, revaluation of earnout liabilities / M&A related put-option liabilities, tax-related, NCI profit-related and other one-off items

    • Underlying basic EPS: EPS based on underlying net profit (attributable to owners of the parent)

    • EBITDA: Operating profit before depreciation, amortization and impairment losses

    • Underlying ROE: Underlying net profit (attributable to owners of the parent) divided by the average of owners' interests as of the beginning and end of the fiscal year

      Note: Fiscal year-end before alignment across the Group means March

    • Constant currency basis: Comparison with the current period where the previous year's numbers are recalculated using the currency exchange rate which is used for the current year's numbers

    • Currency: Currency movements comparing prior period reported gross profit at reported currency to prior period gross profit at constant currency (reported currency of the current year)

    • Acquisitions: The effect of business acquired or disposed of since the beginning of the prior year

    • Organic: Organic growth represents the constant currency year-on-year growth after adjusting for the effect of business acquired or disposed of since the beginning of the prior year. This is calculated by comparing current period reported

gross profit to prior period gross profit, adjusted for the pre-acquisition or pre-disposal gross profit as applicable, and 28

stated at constant exchange rate, in order to derive like-for-like growth

Quarterly Results

(JPY mn)

2016

YoY %

Oct-Dec

2016

YoY %

Jul-Sep

2016

YoY %

Apr-Jun

2016

YoY %

Jan-Mar

Turnover

1,431,880 (0.1)

1,121,089 (4.0)

1,176,393 (1.6)

1,195,570 +0.1

Revenue

Gross profit

Japan International

Underlying operating profit

Japan International

Operating margin

Underlying net profit

250,080

+7.1

236,935

+8.0

93,625

+1.0

143,401

+13.0

64,332

(1.2)

23,061

(20.1)

41,132

+12.9

27.2%

(2.5)

49,013

(7.8)

195,111

(2.8)

183,488

(1.5)

87,148

+0.0

96,381

(2.7)

33,620

+4.6

21,901

+6.6

11,703

+3.0

18.3%

+1.1

20,398

+4.1

193,625

+4.0

181,628

+3.7

83,159

+12.1

98,528

(2.6)

32,843

+11.1

19,180

+44.6

13,677

(16.8)

18.1%

+1.2

22,007

+12.0

199,542

+0.7

186,990

+3.2

99,308

+5.4

87,702

+0.9

35,769

+6.3

33,218

+19.8

2,545

(56.9)

19.1%

+0.5

21,552

+2.6

Operating profit

Net profit

EBITDA

53,682

(5.1)

32,572

(17.5)

68,714

(1.4)

25,347

(9.8)

15,144

(25.6)

35,688

(9.6)

26,854

+24.5

18,569

+45.3

37,374

+15.1

31,796

+44.7

17,215

+64.6

42,287

+25.1

Note: 29

Net profit, underlying net profit… Excluding attribution to non-controlling interests

Quarterly Gross Profit Organic Growth

Dentsu consolidated total

2016

2015

2014

(%)

2016

Japan

2015

2014

International total

2016 2015 2014

Jan-Mar

+5.1

+6.2

- +5.6

+0.0

- +4.5

+13.7

+9.6

Apr-Jun

+9.5

+6.5

- +12.2

+1.9

- +7.2

+10.2

+8.5

Jul-Sep

+2.7

+4.2

- +0.3

+1.4

- +5.2

+6.6

+12.8

Oct-Dec

+3.9

+10.6

- +1.0

+12.9

- +5.8

+8.2

+10.5

International - EMEA

International - Americas

International - APAC

Jan-Mar

+10.7

+11.1

+10.6

(2.0)

+10.4

+4.7

+5.2

+22.5

+14.8

Apr-Jun

+5.0

+16.1

+6.9

+2.4

+7.9

+5.0

+16.8

+5.4

+15.2

Jul-Sep

+5.0

+11.0

+10.8

+5.4

+0.1

+12.8

+5.3

+9.3

+15.5

Oct-Dec

+7.5

+11.0

+10.6

+4.4

+2.1

+8.3

+5.6

+11.0

+12.8

2016

2015

2014

2016

2015

2014

2016

2015

2014

Note:

Given the different year-ends of Dentsu in Japan and Dentsu Aegis Network previously, and the fact that Dentsu in Japan previously reported under J-GAAP, the quarterly organic gross profit growth figures for FY2014 for the Dentsu Group and Dentsu in Japan are not

directly comparable to the figures for FY2015 and FY2016, which are reported on a December year-end basis under IFRS. Therefore, the 30

FY2014 quarterly organic gross profit growth numbers for the Dentsu Group and Dentsu in Japan are not included in the table above.

Analysis of Underlying Operating Profit

(JPY)

2015 Jan-Dec Japan_GP Japan_OE International_GP International_OE

Consolidation

adjustments 2016 Jan-Dec

160.4 bn

+0.2 bn

166.5 bn

+14.9 bn

+8.0 bn

+11.9 bn

+13.0 bn

Notes:

GP… Gross profit 31

OE… Operating expenses (selling, general & administrative expenses, other income and other expenses)

Reconciliation from Underlying NP to Statutory NP

(JPY mn)

Underlying net profit

112,972

113,388

(416)

(0.4)

Adjustment items

(29,470)

(30,298)

+ 827

Operating profit adjustments

(28,883)

(32,226)

+ 3,342

Loss on revaluation of earnout liabilities and M&A related put option liabilities

2016

Jan-Dec

2015

Jan-Dec

YoY # YoY %

(4,844) (3,198) (1,645)

Loss on early redemption of private placement bonds - (818) + 818 Related income tax expense + 3,717 + 5,976 (2,259)

Change in income tax rate (80) (809) + 728 Adjustments attributable to non-controlling interests + 620 + 777 (156)

Net profit

83,501

83,090

+ 411 +0.5

Underlying Effective Tax Rate

Effective Tax Rate

28.3%

32.8%

26.3%

29.7%

-

-

2.1%

3.1%

Note: Underlying net profit and net profit… Excluding attribution to non-controlling interests 32

Effective tax rate…Income tax expense divided by Profit before tax

Financial Position

(JPY mn)

2016

End of Dec

2015

End of Dec

Var. # Var. %

Current assets

1,618,111

1,618,024

+ 87

+0.0

Non-current assets

1,537,118

1,448,051

+ 89,067

+6.2

Total assets

3,155,230

3,066,075

+ 89,155

+2.9

Current liabilities

1,599,235

1,488,602

+ 110,633

+7.4

Non-current liabilities

574,033

474,729

+ 99,304

+20.9

Total liabilities

2,173,269

1,963,331

+ 209,937

+10.7

Owners' interests

932,742

1,068,216

(135,474)

(12.7)

Non-controlling interests

49,218

34,526

+ 14,691

+42.6

Total equity

981,961

1,102,743

(120,782)

(11.0)

Total liabilities and equity

3,155,230

3,066,075

+ 89,155

+2.9

JPY/USD

116.5 yen

120.6 yen

-

(3.4)

JPY/GBP

143.0 yen

178.8 yen

-

(20.0)

33

Repayment Schedule of Debt

(JPY mn)

2016

End of Dec

FY2017

FY2018

FY2019

FY2020

onwards

Total

Japan

5,379

49,316

2,720

126,846

184,262

Short-term debt

2,659

-

-

-

2,659

Long-term debt

2,720

49,316

2,720

126,846

181,602

International

125,110

- 47,816

46,409

219,336

Short-term debt

125,108

- -

-

125,108

Long-term debt

2

- 47,816

46,409

94,225

Dentsu consolidated total

*reference

130,490

49,316

50,536

173,256

403,599

M&A related debt

19,161

22,090

40,147

92,187

173,589

Deferred consideration

17,725

14,104

13,651

20,539

66,021

M&A related put-option liabilities

1,436

7,986

26,496

71,648

107,568

34

Results of Parent Company (J-GAAP)

(JPY mn)

2016

Jan-Dec

YoY %

2016

Oct-Dec

YoY %

2016

Jul-Sep

YoY %

2016

Apr-Jun

YoY %

2016

Jan-Mar

YoY %

Net sales

Gross profit

gross profit margin

SG&A

Operating income

vs. gross profit

Ordinary income

Income before income taxes

Net income

1,600,196

+2.6

234,846

14.7%

+3.6

+0.2

170,109

(0.2)

64,736

27.6%

+15.3

+2.8

97,131

+17.3

122,853

+53.2

91,962

+51.0

414,305 (0.3)

376,954 +0.3

372,917 +2.2

436,019 +7.9

58,247 (3.3)

14.1% (0.4)

56,143 +0.3

14.9% (0.0)

53,527 +9.0

14.4% +0.9

66,927 +9.3

15.3% +0.2

44,091 +3.0

41,231 (6.1)

41,299 +5.8

43,487 (2.8)

14,156 (18.9)

24.3% (4.7)

14,911 +23.4

26.6% +5.0

12,228 +20.9

22.8% +2.2

23,440 +42.1

35.0% +8.1

17,090 (25.0)

17,944 +36.8

16,421 (41.2)

45,674 +140.4

17,563 (24.7)

40,999 +163.2

18,172 (39.0)

46,118 +301.0

11,879 (31.8)

28,343 +158.3

13,744 (45.4)

37,994 +417.8

35

Note: SG&A… Selling, general & administrative expenses

Net Sales of Parent Company by Business Category

(J-GAAP)

(JPY mn)

2016

Jan-Dec

YoY %

2016

Oct-Dec

YoY %

2016

Jul-Sep

YoY %

2016

Apr-Jun

YoY %

2016

Jan-Mar

YoY %

Newspapers

Magazines

Radio

Television

Time Spot

Interactive Media

OOH Media

Creative

Marketing/Promotion

Content Services

Others

Total

89,171

(7.1)

27,307

(14.8)

14,106

+0.4

692,621

295,096

397,525

+1.8

+2.7

+1.2

96,092

+13.0

57,260

(3.7)

191,211

(4.6)

219,334

+1.6

170,361

+26.7

42,728

+0.8

1,600,196

+2.6

22,589

(10.2)

19,130

(3.9)

19,422

(5.6)

28,029

(7.8)

7,367

(17.6)

6,744

(14.0)

6,017

(13.4)

7,177

(13.8)

3,791

+0.1

3,459

(1.6)

3,407

+4.9

3,449

(1.3)

185,098

+0.9

167,864

+3.1

172,135

+0.5

167,523

+3.1

74,078

(0.1)

79,706

+8.4

68,850

+1.1

72,461

+1.3

111,020

+1.5

88,157

(1.3)

103,285

+0.1

95,062

+4.4

27,969

+18.4

22,907

+21.5

22,254

+12.3

22,960

+1.0

14,385

(4.6)

12,834

(8.3)

14,563

(8.7)

15,477

+7.1

45,363

(1.2)

45,183

(8.8)

44,675

(3.6)

55,988

(4.5)

61,749

(7.6)

54,840

(2.4)

50,105

+19.0

52,638

+3.5

34,959

+10.4

33,423

+2.4

29,497

+4.8

72,481

+72.4

11,030

+1.9

10,566

+0.1

10,837

+2.9

10,293

(1.8)

414,305

(0.3)

376,954

+0.3

372,917

+2.2

436,019

+7.9

Note:

* Scale of digital domain operations in Japan (including parent company)… Please refer to the "Regional Information - 36

Gross Profit -" slide

Net Sales of Parent Company by Industry

(J-GAAP)

(JPY mn)

2016

Jan-Dec

YoY %

2016

Oct-Dec

YoY %

2016

Jul-Sep

YoY %

2016

Apr-Jun

YoY %

2016

Jan-Mar

YoY %

54,757

39,330

41,501

33,461

27,317

24,449

23,661

25,826

21,992

15,660

17,093

18,830

13,358

13,723

11,764

31,575

+5.8

+1.5

+23.7

+3.8

(2.1)

(25.3)

(15.3)

+2.6

+4.6

(12.7)

+15.9

(5.5)

+15.2

(0.4)

(8.2)

(5.7)

57,535

35,219

35,371

30,502

27,861

25,595

20,419

19,836

17,404

16,771

16,155

12,676

13,857

10,403

8,059

29,283

+12.2

(10.4)

+14.5

+5.6

+3.4

+3.7

(11.2)

(11.7)

+12.9

(4.5)

(3.6)

(12.7)

+16.5

+14.2

(13.6)

(13.3)

45,633

44,340

38,655

31,613

28,518

19,371

23,320

18,282

17,094

19,414

13,247

13,405

9,855

10,423

9,483

30,257

+8.5

+3.1

+15.8

+0.6

+7.2

(20.6)

(6.6)

(14.0)

+27.9

+11.5

(4.7)

(12.4)

(14.3)

+18.8

(9.3)

+11.3

62,664

36,504

30,578

48,855

32,256

23,253

22,947

23,992

20,799

21,960

14,922

12,212

17,682

14,149

10,941

42,297

+4.8

(5.2)

+16.9

+40.3

+38.5

(22.4)

(7.1)

+1.1

+4.6

+16.6

+24.4

(6.4)

+35.7

+7.9

(1.6)

+0.8

414,305

(0.3)

376,954

+0.3

372,917

+2.2

436,019

+7.9

Information/Communications

220,590

+7.7

Beverages/Cigarettes

155,395

(2.6)

Cosmetics/Toiletries

146,108

+17.9

Finance/Insurance

144,432

+13.4

Foodstuffs

115,953

+10.7

Automobiles/Related Products

92,670

(17.1)

Distribution/Retailing

90,348

(10.2)

Food Services/Other Services

87,937

(5.0)

Government/Organizations

77,291

+10.9

Transportation/Leisure

73,807

+2.9

Hobbies/Sporting Goods

61,418

+7.0

Pharmaceuticals/Medical Supplies

57,125

(9.1)

Real Estate/Housing Facilities

54,754

+14.0

Home Electric Appliances/AV Equipment

48,699

+8.7

Apparel/Fashion, Accessories/Personal Items

40,248

(7.9)

Others

133,413

(2.2)

Total

1,600,196

+2.6

37

2016

Jan-Dec

2015

Jan-Dec

Var. %

2016

End of Dec

2015

End of Dec

Var. %

Effects of Currency Exchange Rates

Average rate

Period end rate

JPY/USD

JPY/EUR

JPY/CNY

JPY/GBP

JPY/AUD

108.9 yen

121.0 yen

(10.1)

120.4 yen

134.3 yen

(10.4)

16.4 yen

19.2 yen

(14.8)

147.8 yen

185.1 yen

(20.2)

80.9 yen

91.1 yen

(11.2)

116.5 yen

120.6 yen

(3.4)

122.7 yen

131.8 yen

(6.9)

16.8 yen

18.4 yen

(8.7)

143.0 yen

178.8 yen

(20.0)

84.4 yen

87.9 yen

(4.0)

Gross profit ratio by currency

(%)

JPY

USD

EUR

CNY

GBP

AUD

Others

Total

FY2016 Jan-Dec

46.0

17.1

9.0

5.8

5.7

3.5

12.9

100.0

38

Summary of Carat Ad Spend

(%)

2017

Market growth forecast

2016

Market growth forecast

Japan

1.2

1.8

EMEA

2.9

3.0

UK

4.6

5.4

Germany

2.1

2.3

France

1.2

0.9

Spain

4.4

5.0

Americas

4.5

5.5

USA

3.8

5.0

Canada

3.0

3.0

Brazil

4.5

4.8

APAC (excluding Japan)

5.5

4.8

China

5.5

5.7

Australia

4.5

5.4

Global

4.0

4.4

39

Source: Carat, "Global Advertising Expenditure Forecasts - September 2016"

Dentsu Inc. published this content on 16 February 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 16 February 2017 01:16:04 UTC.

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