Dentsu Reports Consolidated Financial Results for the Nine Months Ended December 31, 2012 (Japanese GAAP)

Posts 1,412.1 Billion Yen in Consolidated Billings (Net Sales) (4.0% year-on-year increase), 38.1 Billion Yen in Operating Income (24.1% increase), 39.0 Billion Yen in Ordinary Income (4.8% increase) and 19.9 Billion Yen in Net Income (50.2% increase) —

TOKYO--()--Dentsu Inc. (TOKYO:4324)(ISIN:JP3551520004)(President & CEO: Tadashi Ishii; Head Office: Tokyo; Capital: 58,967.1 million yen) today convened a meeting of its Board of Directors at its Head Office in Tokyo at which it finalized its consolidated and non-consolidated financial results for the nine months ended December 31, 2012 (April 1–December 31, 2012).

Summary of financial results for the period
During the nine months ended December 31, 2012, the Japanese economy showed a gradual recovery due to demand from reconstruction in the wake of the Great East Japan Earthquake and the effects of policies such as Japan's eco-car subsidy program. However, the situation remained uncertain due to concerns about the prolonged European government debt crisis as well as the slowdown in economic growth seen in China and other emerging economies.

Meanwhile, demand for advertising, mainly television spots, showed a strong upturn in the April-June quarter as the market rebounded from the effects of the devastating earthquake and tsunami which had affected the advertising industry during the same period a year earlier. However, against the background of increasing uncertainty about the future of the global economy, advertising demand started to slow in the summer.

Under such circumstances, the Dentsu Group (hereinafter "the Group") leveraged its comprehensive resources and proactively pursued a diverse array of business opportunities by offering "Integrated Communication Design" solutions. Furthermore, events such as the London 2012 Olympic Games and TOYOTA Presents FIFA Club World Cup Japan 2012 provided the Group with opportunities for multi-faceted business development.

As a result, for the nine months ended December 31, 2012, the Group posted consolidated billings (net sales) of 1,412,195 million yen, an increase of 4.0% compared with the same period of the previous fiscal year; gross profit of 248,963 million yen, an increase of 6.0%; operating income of 38,116 million yen, an increase of 24.1%; and ordinary income of 39,098 million yen, an increase of 4.8%. Net income for the nine months ended December 31, 2012 was 19,939 million yen, an increase of 50.2%.

Looking at the results by business segment, net sales of 1,368,930 million yen, an increase of 4.0% compared with the same period of the previous fiscal year, and segment income of 35,106 million yen, an increase of 24.0%, were posted in the Advertising segment. In the Information Services segment, net sales of 48,113 million yen, an increase of 9.7%, and segment income of 742 million yen were posted (a segment loss of 461 million yen was posted for the same period of the previous fiscal year). Net sales in the Other Business segment totaled 12,365 million yen, a decrease of 9.9%, with segment income of 823 million yen, an increase of 87.3%.

By geographic area, net sales of 1,217,696 million yen, an increase of 1.8% compared with the same period of the previous fiscal year, and operating income of 34,781 million yen, an increase of 21.7%, were posted in Japan. In other countries, net sales of 200,980 million yen, an increase of 19.8%, and operating income of 3,120 million yen, an increase of 68.8%, were posted.

Regarding Dentsu Group companies with a December 31 closing date, including subsidiaries in countries other than Japan, their financial results for the nine months from January 1 to September 30, 2012 are, as a general rule, incorporated in the consolidated financial results for the nine months ended December 31, 2012.

Dentsu posted non-consolidated billings (net sales) of 1,037,789 million yen, an increase of 0.9% compared with the same period of the previous fiscal year; gross profit of 142,699 million yen, an increase of 2.0%; operating income of 24,705 million yen, an increase of 23.3%; ordinary income of 28,565 million yen, an increase of 1.8%; and net income of 15,869 million yen, an increase of 31.0%.

For more details regarding the consolidated and non-consolidated results, please see the presentation slides in the Presentation Materials section of the company website at:
http://www.dentsu.com/ir/

Reference: Scope of Consolidated Financial Results
As of December 31, 2012, the Dentsu Group includes 150 consolidated subsidiary companies and 38 affiliated companies accounted for by the equity method. 88 of these companies are located in Japan and 100 in countries other than Japan. By business segment, 170 of these companies fall into the Advertising segment, 13 into the Information Services segment, and 5 into the Other Businesses segment.

Outlook for the fiscal year ending March 31, 2013
Although results for the nine months ended December 31, 2012 were slightly below expectations, advertising demand has been on an upward trend since the start of the 2013 calendar year. Consequently, there are no revisions to the forecast of consolidated financial results for the fiscal year ending March 31, 2013 which was announced on November 8, 2012.

On July 12, 2012, Dentsu announced that it had agreed with Aegis Group plc, a leading global media and digital communications agency headquartered in the United Kingdom, to proceed with the acquisition of Aegis by scheme of arrangement under the laws of England and Wales to make it a wholly owned subsidiary of Dentsu. As of today, February 8, the acquisition of Aegis has not become effective yet and therefore its performance has not been contemplated in the Company's consolidated results for the fiscal year ending March 31, 2013.

Trend of Quarterly Consolidated Financial Results and Forecast for the Fiscal Year Ending March 31, 2013

(Unit: million yen)
FY2012*  

Three
months
ended
June 30,
2012
(Apr–Jun)

 

YoY
change
(%)

 

Three
months
ended
Sept. 30,
2012
(Jul–Sep)

 

YoY
change
(%)

 

Three
months
ended
Dec. 31,
2012
(Oct–Dec)

 

YoY
change
(%)

 

Nine
months
ended
Dec. 31,
2012
(Apr–Dec)

 

YoY
change
(%)

Net sales 447,469 11.3 473,566 2.7 491,159 (0.6) 1,412,195 4.0
Gross profit 76,481 12.2 86,172 6.1 86,308 1.1 248,963 6.0

Selling, general and
administrative expenses

66,910 4.7 73,633 3.9 70,302 1.5 210,846 3.3
Operating income 9,571 126.4 12,539 21.4 16,005 (1.0) 38,116 24.1
Ordinary income 11,497 78.9 8,287 (37.1) 19,488 10.0 39,098 4.8
Net income   5,886   349.8   3,463   (48.3)   10,590   100.9   19,939   50.2
* FY2012: April 1, 2012 to March 31, 2013
 

(Unit: million yen)

FY2012*  

Six
months
ended
Sept. 30,
2012
(Apr–Sep)

 

YoY
change
(%)

 

Forecast
for the
six months
ending
March 31,
2013
(Oct–Mar)

 

YoY
change
(%)

 

FY2012*
forecast
announced
on Nov. 8
2012

 

YoY
change
(%)

Net sales 921,036 6.7 1,039,963 1.0 1,961,000 3.6
Operating income 22,110 51.9 37,889 1.2 60,000 15.4
Ordinary income 19,784 0.9 37,315 (13.7) 57,100 (9.1)
Net income   9,349   16.8   18,750   (13.1)   28,100   (5.0)
* FY2012: April 1, 2012 to March 31, 2013
 

Dentsu's forecast of non-consolidated financial results for the fiscal year ending March 31, 2013 that was revised on November 8, 2012 remains unchanged:

  • Net sales: 1,440.0 billion yen (2.5% year-on-year increase)
  • Operating income: 39.0 billion yen (23.1% year-on-year increase)
  • Ordinary income: 39.9 billion yen (1.9% year-on-year decrease)
  • Net income: 20.0 billion yen (52.6% year-on-year decrease)

Cautionary statement with respect to forward-looking statements
These business results forecasts have been made by Dentsu on the basis of currently available information, and hence involve potential risks and uncertainties. Consequently, actual business results may differ from the forecasts due to changes in various factors.

 
 

Consolidated Financial Results

for the Nine Months Ended December 31, 2012

(From April 1 to December 31, 2012)

 

1. Summary of Consolidated Balance Sheets

 

(Millions of yen: Rounded down to the nearest one million yen)

As of
March 31,
2012

   

As of
December 31,
2012

 

 

% Change

ASSETS
Current assets 722,223 580,786 (19.6)
Noncurrent assets 479,671 586,487 22.3
Total assets 1,201,894 1,167,273 (2.9)
 
LIABILITIES
Current liabilities 525,181 479,745 (8.7)
Noncurrent liabilities 119,824 94,767 (20.9)
Total liabilities 645,005 574,513 (10.9)
 
NET ASSETS

Shareholders' equity

541,929 554,031 2.2
Accumulated other

comprehensive income

(5,638) 17,239
Minority interests 20,598 21,489 4.3
Total net assets 556,889 592,760 6.4
Total liabilities and net assets 1,201,894 1,167,273 (2.9)
 

2. Summary of Consolidated Statements of Income

 

(Millions of yen: Rounded down to the nearest one million yen)

Nine months
ended
December 31,
2011

   

Nine months
ended
December 31,
2012

 

 

% Change

Net sales 1,357,340 1,412,195 4.0
Gross profit 234,774 248,963 6.0
Operating income 30,723 38,116 24.1
Non-operating income 10,091 7,414 (26.5)
Non-operating expenses 3,505 6,433 83.5
Ordinary income 37,309 39,098 4.8
Extraordinary income 499 233 (53.2)
Extraordinary loss 5,605 2,810 (49.9)
Income before income taxes and

minority interests

32,203 36,521 13.4
Net income 13,274 19,939 50.2
 

3. Summary of Consolidated Statements of Comprehensive Income

 

(Millions of yen: Rounded down to the nearest one million yen)

Nine months
ended
December 31,
2011

   

Nine months
ended
December 31,
2012

 

 

% Change

Income before minority interests 14,151 21,057 48.8
Other comprehensive income (1,162) 22,961
Comprehensive income 12,989 44,018 238.9
 

About Dentsu Inc.
Founded in 1901, Dentsu Inc. has held the position of the world's largest single-brand agency for 40 years. Through its unique "Integrated Communication Design" approach, Dentsu offers multinational clients the most comprehensive range of advertising and marketing services in the industry. While continuing to pursue innovation in the digital arena, Dentsu is active in the production and marketing of sports, movies, anime and other entertainment content on a global scale. The Dentsu Group has more than 6,000 clients and around 22,000 employees worldwide.
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Contacts

Dentsu Inc.
Shusaku Kannan, (813) 6216-8042
Senior Manager
Corporate Communications Division
s.kannan@dentsu.co.jp

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Contacts

Dentsu Inc.
Shusaku Kannan, (813) 6216-8042
Senior Manager
Corporate Communications Division
s.kannan@dentsu.co.jp