Dentsu Reports Revenue Growth of 4.5% For First 9 Months

Company Says Results Lag Expectations But Demand For Ads Is Up In 2013

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Slowing growth in emerging markets like China and the prolonged European debt crisis contributed to financial results slightly lower than expectations for the nine-month period ended Dec. 31, 2012, Dentsu Inc. said.

The Japanese agency company gave no update when its pending $4.9 billion acquisition of London-based media and digital network Aegis Group would close. Dentsu has previously said it expected to complete the deal by the end of this month. (Aegis has said that it will no longer report its financial results separately, in anticipation of the deal closing.)

Dentsu reported gross profit (revenue) in the nine months ended Dec. 31, 2012, was up 6.0% in yen, while net income grew 50.2% in yen.

Revenue in the nine-month period, converted to U.S. dollars, rose 4.5% to $3.1 billion. The company's net income in dollars was up 48.1% to $249.4 million, from $168.4 million for the same period last year.

Dentsu's revenue in the three months ended Dec. 31, 2012, edged up 1.1% in yen while net income more than doubled (up 100.9%) in yen.

Domestically, the Tokyo-based company cited the positive effects of Japan's gradual recovery from the March 2011 massive earthquake and tsunami, along with government eco-car subsidies. But the overall market remained soft amid uncertainty about the global economy.

Dentsu "proactively pursued a diverse array of business opportunities by offering 'Integrated communication design' solutions," the company said. Events such as the 2012 London Olympics provided "opportunities for multi-faceted business development."

Dentsu stood by previous projections for the fiscal year ending March 31, 2013, expecting a 3.6% increase in net sales. Net income is projected to decline 5.0%.

"Although results for the nine months ended Dec. 31, 2012 were slightly below expectations, advertising demand has been on an upward trend since the start of the 2013 calendar year," Dentsu said, explaining the reasoning behind its forecast.

In this nine-month financial period, Dentsu generated about 86% of net sales from its home market but will be less reliant on Japan, where revenue is growing much more slowly than in Dentsu's overseas markets, after completing the Aegis deal.

Separately, Dentsu said in an announcement that 62 employees have applied to take an early retirement package, a program Dentsu offers every few years. It's open to staffers between the ages of 40 and 59 who have been at the company for 10 years or more, and the deadline for applications was Jan. 31, 2013. Dentsu said the goal was to get 100 staffers.

Earlier this week, Dentsu announced the opening of a branch office in Myanmar.

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