DENTSU INC. FY2016 First Quarter Results
May 16, 2016
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 7.2% (YoY, constant currency basis)
Organic gross profit growth: +5.1%
(Japan +5.6% / International +4.5%)
Underlying operating profit increased by 7.4% (constant currency basis)
Underlying operating margin: 19.1%, maintained the same level as 2015 (constant currency basis)
Underlying basic EPS increased by 3.8%
FY2016 forecast has been changed, mainly due to the recent JPY
appreciation since the previous forecast announcement in February.
1
Summary
2016
Jan-Mar
2015
Jan-Mar
YoY %
(JPY mn)
Constant currency basis %
Turnover
1,195,570
1,194,252 +0.1 -
Revenue |
Gross profit |
Underlying operating profit Operating margin |
Underlying net profit Underlying basic EPS |
199,542 |
186,990 |
35,769 19.1% |
21,552 75.6 yen |
198,157 | +0.7 | - | |
181,121 | +3.2 | +7.2 | |
33,651 | +6.3 | +7.4 | |
18.6% | +0.5 | +0.0 | |
21,003 | +2.6 | - | |
72.8 yen | +3.8 | - | |
Operating profit |
Net profit |
EBITDA |
31,796 |
17,215 |
42,287 |
21,976 | +44.7 | - |
10,459 | +64.6 | - |
33,808 | +25.1 | - |
Currency | ||||
JPY/USD (Jan-Mar average) | 115.4 yen | 119.1 yen | (3.1) | - |
JPY/GBP (Jan-Mar average) | 165.2 yen | 180.5 yen | (8.4) | - |
Note: 2
Net profit, underlying net profit and underlying basic EPS… Excluding attribution to non-controlling interests
Gross Profit Growth
(JPY)
2015
Jan-Mar
Currency
181.1 bn
-6.6 bn
Acquisitions
Organic
2016
Jan-Mar
Gross profit after currency &
acquisitions adjustment
177.8 bn
+3.3 bn
+9.1 bn
bn
Organic growth
+5.1%
3
Regional Information - Gross Profit -
(JPY mn)
2016
Jan-Mar
94,199
+5.4
+5.4
+5.6
19.6%
(0.8)
(0.8)
Japan 99,308
Digital domain ratio 18.8%
2015
Jan-Mar
YoY %
Constant currency basis %
Organic growth
%
EMEA
Americas
APAC
International total
Digital domain ratio
33,730
30,929
23,042
87,702
47.8%
30,709 +9.8 +19.0
+10.7
32,733 (5.5) +0.9
(2.0)
23,514 (2.0) +8.1
+5.2
86,957 +0.9 +9.2
+4.5
45.6% +2.2 +2.9
Consolidation adjustments
(20)
(35)
- - -
Dentsu consolidated total
186,990
Digital domain ratio
32.4%
International business ratio
46.9%
181,121
+3.2
+7.2
+5.1
32.1%
48.0%
+0.3
(1.1)
+1.2
+0.9
4
Regional Information - Underlying Operating Profit -
(JPY mn)
Underlying operating profit
2016
Jan-Mar
Constant
2015
YoY % currency
Jan-Mar
basis %
Operating margin
2016
Jan-Mar
Constant
2015
YoY % currency
Jan-Mar
basis %
Japan
33,218
27,719
+19.8
+19.8
33.4%
29.4%
+4.0
+4.0
International total
2,545
5,904
(56.9)
(55.4)
2.9%
6.8%
(3.9)
(4.2)
Consolidation adjustments
5 27 - - - - - -
Dentsu consolidated total
35,769
33,651
+6.3
+7.4
19.1%
18.6%
+0.5
+0.0
5
Change in Underlying Operating Margin
2015
Jan-Mar
Japan margin change
International margin change
Currency
Consolidation adjustments, etc.
2016
Jan-Mar
18.6%
+0.5%
-0.2%
19.1%
+2.1%
-1.9%
6
Operating Margin
40.0%
Dentsu consolidated
Japan International
40.0%
35.0%
30.0%
25.0%
30.3%
29.4%
33.4%
35.0%
30.0%
25.0%
24.2%
26.0%
Latest forecast
20.0%
15.0%
18.8%18.6%
19.1%
20.0%
15.0%
19.7%
15.3%
21.1%
16.9%
20.2%
10.0%
10.0%
5.0%
6.8%
5.0%
0.0%
0.0%
Jan-Mar
Jan-Mar
Jan-Mar
Jan-Dec
Jan-Dec
Jan-Dec
2014
2015
2016
2014
2015
2016
2.7%
2.9%
7
Reconciliation from Underlying OP to Statutory OP
(JPY mn)
2016
Jan-Mar
2015
Jan-Mar
YoY # YoY %
Underlying operating profit
35,769
33,651
+ 2,117 +6.3
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 on sales of shares of subsidiaries and associates Revaluation gain (loss) on investment reclassification Impairment loss
Special retirement expenses Others
(3,972)
(5,460)
(284)
+ 1,772
+ 1,419
+ 1,445
-
(5)
(44)
(1,043)
(11,675)
(5,354)
(137)
(6,184)
(1,374)
-
+ 355
(1,161)
(3,751)
(253)
+ 7,702
(106)
(146)
+ 7,956
+ 2,794
+ 1,445
(355)
+ 1,155
+ 3,706
(790)
Operating profit 31,796 21,976 + 9,819 +44.7
8
Statutory Operating Profit to Net Profit
(JPY mn)
2016
Jan-Mar
2015
Jan-Mar
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
31,796
910
32,706
(4,293)
1,253
5,547
28,412
9,603
18,809
17,215
1,593
21,976
848
22,824
(1,863)
2,328
4,192
20,960
9,028
11,932
10,459
1,473
+ 9,819
+44.7
+ 62
+7.3
+ 9,881
+43.3
(2,429)
(1,074)
+ 1,354
-
(46.2)
+32.3
+ 7,452
+35.6
+ 575
+6.4
+ 6,876
+57.6
+ 6,756
+64.6
+ 120
+8.2
9
Financial Position
(JPY mn)
2016
End of Mar
2015
End of Dec
Var. # Var. %
Current assets
1,516,801
1,618,024
(101,222)
(6.3)
Non-current assets
1,364,186
1,448,051
(83,864)
(5.8)
Total assets
2,880,988
3,066,075
(185,086)
(6.0)
Current liabilities
1,391,173
1,488,602
(97,428)
(6.5)
Non-current liabilities
456,592
474,729
(18,136)
(3.8)
Total liabilities
1,847,766
1,963,331
(115,565)
(5.9)
Owners' interests
999,396
1,068,216
(68,820)
(6.4)
Non-controlling interests
33,825
34,526
(701)
(2.0)
Total equity
1,033,222
1,102,743
(69,521)
(6.3)
Total liabilities and equity
2,880,988
3,066,075
(185,086)
(6.0)
JPY/USD
112.7 yen
120.6 yen
-
(6.6)
JPY/GBP
161.9 yen
178.8 yen
-
(9.4)
10
Net Debt
(JPY mn)
Note: LTM… Last twelve months
2016
2015
353,783
263,322
(3,733)
(18,714)
90,460
+ 14,980
End of Mar
End of Dec
Total debt
350,049
Cash and cash equivalents
244,608
Net debt
105,441
Total debt (LTM average)
374,380
380,689
(6,309)
Cash and cash equivalents (LTM average)
278,029
271,719
+ 6,310
Net debt (LTM average)
96,350
108,970
(12,620)
EBITDA (LTM)
183,933
175,454
+ 8,479
Net debt / EBITDA (LTM)
0.57
0.52
Net debt (LTM average) / EBITDA (LTM)
0.52
0.62
Var. #
11
FY2016 Forecast
(JPY mn)
2016
Jan-Dec
Previous
forecast Variance % (Feb)
2015
Jan-Dec
YoY %
Constant
currency basis %
Revenue
Gross profit
Underlying operating profit
Operating margin
Underlying net profit
Underlying basic EPS
817,200
768,700
155,000
20.2%
104,500
366.5 yen
865,600
(5.6)
817,100
(5.9)
164,300
20.1%
(5.7)
+0.1
110,400
387.2 yen
(5.3)
(5.3)
818,566
(0.2)
-
761,996
+0.9
+8.4
160,438
(3.4)
+2.1
21.1%
(0.9)
(1.2)
113,388
(7.8)
-
395.7 yen
(7.4)
-
Operating profit
132,400
142,000
(6.8)
128,212
+3.3
-
Net profit
81,200
88,900
(8.7)
83,090
(2.3)
-
Currency
At May 4, 2016
Av. Jan-Sep in 2015
Av. Jan-Dec in 2015
JPY/USD
106.1 yen
120.9 yen
(12.2)
121.0 yen
(12.3)
-
JPY/GBP
155.4 yen
185.3 yen
(16.2)
185.1 yen
(16.0)
-
Note: 12
Net profit, underlying net profit and underlying basic EPS … Excluding attribution to non-controlling interests
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 13
period of the previous year.
Appendices
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
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 stated at constant exchange rate, in order to derive like-for-like growth
15
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 | - | +6.5 | - - | +1.9 | - - | +10.2 | +8.5 |
Jul-Sep | - | +4.2 | - - | +1.4 | - - | +6.6 | +12.8 |
Oct-Dec | - | +10.6 | - - | +12.9 | - - | +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 | - | +16.1 | +6.9 | - | +7.9 | +5.0 | - | +5.4 | +15.2 |
Jul-Sep | - | +11.0 | +10.8 | - | +0.1 | +12.8 | - | +9.3 | +15.5 |
Oct-Dec | - | +11.0 | +10.6 | - | +2.1 | +8.3 | - | +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 16
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-Mar Japan_GP Japan_OE International_GP International_OE
Consolidation
adjustments 2016 Jan-Mar
33.6 bn
-0.0 bn
35.7 bn
+5.1 bn
-0.3 bn
+0.7 bn
+4.1 bn
Notes:
GP… Gross profit 17
OE… Operating expenses (selling, general & administrative expenses, other income and other expenses)
Reconciliation from Underlying NP to Statutory NP
(JPY mn)
Underlying net profit | 21,552 | 21,003 | + 548 | +2.6 |
Adjustment items | (4,336) | (10,544) | + 6,207 | |
Operating profit adjustments | (3,972) | (11,675) | + 7,702 |
Loss on revaluation of earnout liabilities and M&A related put option liabilities
2016
Jan-Mar
2015
Jan-Mar
YoY # YoY %
(2,868) (1,272) (1,595)
Related income tax expense + 2,312 + 2,203 + 109 Adjustments attributable to non-controlling interests + 192 + 200 (7)
Net profit 17,215 10,459 + 6,756 +64.6
18
Note: Underlying net profit and net profit… Excluding attribution to non-controlling interests
Q1 FY2016 Results of Parent Company (J-GAAP)
(JPY mn)
2016
Jan-Mar
2015
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 |
436,019 |
66,927 15.3% |
43,487 |
23,440 35.0% |
45,674 |
46,118 |
37,994 |
403,949 | +7.9 |
61,253 15.2% | +9.3 +0.2 |
44,757 | (2.8) |
16,496 26.9% | +42.1 +8.1 |
19,000 | +140.4 |
11,500 | +301.0 |
7,338 | +417.8 |
19
Note: SG&A… Selling, general & administrative expenses
Net Sales of Parent Company by Business Category
(J-GAAP)
(JPY mn)
2016
Jan-Mar
YoY %
Newspapers |
Magazines |
Radio |
Television Time Spot |
Interactive Media |
OOH Media |
Creative |
Marketing/Promotion |
Content Services |
Others |
Total |
28,029 | (7.8) |
7,177 | (13.8) |
3,449 | (1.3) |
167,523 72,461 95,062 | +3.1 +1.3 +4.4 |
22,960 | +1.0 |
15,477 | +7.1 |
55,988 | (4.5) |
52,638 | +3.5 |
72,481 | +72.4 |
10,293 | (1.8) |
436,019 | +7.9 |
Note: Scale of digital domain operations in Japan (including parent company)… Please refer to the "Regional Information 20
- Gross Profit -" slide
Net Sales of Parent Company by Industry
(J-GAAP)
(JPY mn)
2016
Jan-Mar
Information/Communications | 59,642 | +4.6 |
Finance/Insurance | 48,951 | +39.6 |
Beverages/Cigarettes | 36,165 | (4.5) |
Foodstuffs | 33,320 | +35.6 |
Cosmetics/Toiletries | 29,472 | +16.4 |
Automobiles/Related Products | 23,556 | (21.5) |
Food Services/Other Services | 23,222 | +1.1 |
Distribution/Retailing | 22,294 | (5.2) |
Government/Organizations | 21,917 | +4.4 |
Transportation/Leisure | 20,785 | +16.3 |
Real Estate/Housing Facilities | 17,470 | +35.0 |
Hobbies/Sporting Goods | 14,861 | +23.9 |
Home Electric Appliances/AV Equipment | 14,169 | +8.0 |
Pharmaceuticals/Medical Supplies | 12,840 | (8.7) |
Energy/Materials/Machinery | 11,827 | +30.4 |
Others | 45,520 | (4.4) |
Total | 436,019 | +7.9 |
YoY %
21
2016
Jan-Mar
2015
Jan-Mar
Var. %
2016
End of Mar
2015
End of Dec
Var. %
Effects of Currency Exchange Rates
Average rate
Period end rate
JPY/USD |
JPY/EUR |
JPY/GBP |
JPY/CNY |
JPY/AUD |
115.4 yen | 119.1 yen | (3.1) |
127.2 yen | 134.2 yen | (5.2) |
165.2 yen | 180.5 yen | (8.4) |
17.6 yen | 19.1 yen | (7.7) |
83.2 yen | 93.7 yen | (11.2) |
112.7 yen | 120.6 yen | (6.6) |
127.7 yen | 131.8 yen | (3.1) |
161.9 yen | 178.8 yen | (9.4) |
17.4 yen | 18.4 yen | (5.3) |
86.3 yen | 87.9 yen | (1.9) |
Gross profit ratio by currency
(%)
JPY | USD | EUR | GBP | CNY | AUD | Others | Total |
FY2016 Jan-Mar
53.1 | 13.9 | 8.3 | 5.8 | 4.6 | 3.2 | 11.1 | 100.0 |
22
Dentsu Inc. published this content on 16 May 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 16 May 2016 06:47:08 UTC.
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