Shares of Dentsu Group, the Japanese advertising company, experienced a sharp decline on Tuesday in response to its disappointing second-quarter results and a revised full-year profit forecast.
Disappointing Q2 Results Lead to Downturn in Shares
The company's shares dropped by 7.1%, trading at 4,224 yen. The decline was even greater earlier in the day when shares fell as much as 7.6%.
Net Profit Falls Below Expectations
Dentsu announced on Monday, after the market closed, that its net profit for the quarter ended in June plunged by 81.5% compared to the same period last year, amounting to Y3.4 billion ($23.4 million). This figure fell short of the Y14.00 billion estimate compiled by FactSet analysts.
Operating Profit Margin Deteriorates
In addition to the decline in net profit, Dentsu's second-quarter operating profit margin worsened by 5.2 percentage points compared to the previous year, now standing at 8.7%.
Revenue Decreases Globally, except in Japan
All geographic regions, except Japan, experienced a decrease in net revenue compared to the previous year.
Revised Net-Profit Forecast for 2023
Given the worse-than-anticipated first-half results, Dentsu has revised its net-profit forecast for 2023, adopting a more cautious outlook for the second half.
The company now anticipates a 16% increase in net profit reaching Y69.20 billion, lower than the previous forecast of Y77.10 billion.
In conclusion, Dentsu Group is facing challenges as its second-quarter results fall below expectations and its full-year profit forecast is revised downwards. The company's shares experienced a significant decline in response to these developments.
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