Advertising giant Dentsu Group Inc. on Monday reported a record net loss of ¥159.60 billion ($1.5 billion) in fiscal 2020, as its mainstay advertising business slumped amid the coronavirus pandemic.
The annual loss almost doubled from ¥80.89 billion in fiscal 2019 after Dentsu had to record an impairment loss related to its overseas business.
Sales fell 10.4% to ¥939.24 billion and an operating loss of ¥140.63 billion was reported in the 12 months through Dec. 31, Dentsu said. It did not give an earnings outlook for fiscal 2021, citing uncertainty over the pandemic.
The spread of the novel coronavirus reduced economic activity globally in 2020, affecting the advertising industry that is sensitive to economic trends. The health crisis has hit businesses to varying degrees, with companies in the services sector suffering a severe blow.
Dentsu saw advertising hit by the pandemic both in Japan and other parts of the world such as Europe. The firm said it will proceed with structural reforms while soliciting early voluntary retirement.
“The current placement of our employees is not best suited to provide necessary services to our customers,” Dentsu executive officer Arinobu Soga said during an online press briefing.
On the possibility of selling its headquarters building in Tokyo’s Minato Ward, Soga said, “It’s true that we are considering it as we look ahead. But there has been no progress since January when some reports emerged (of a potential sale).”
Sources close to the matter said last month that Dentsu was considering selling its 48-story building for some ¥300 billion, a price that would make it the highest-priced building ever to be sold in Japan.
The idea came about in response to the pandemic-triggered change in working styles. Most Dentsu employees have been working remotely.
The sources said at the time that Dentsu had no plans to move its headquarters from the current location and would pay rent for office space even if the sale of the building was to be realized.
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