Dentsu voices concern despite profit

Dentsu, the Japanese communications giant, has warned of uncertain times ahead in the advertising market despite hitting a new record for net sales in the three months to 30 June.

The group reported a leap in operating income of 23.1 per cent to 11.13 billion yen (£53 million) for the period. Net sales increased 6.4 per cent to 484 billion yen (£2.2 billion).

The group said the figures reflected the sustained recovery of the Japanese economy as well as Dentsu's heavy involvement in activity surrounding the World Cup.

But the company voiced concern about the effects of continuing high oil prices, an increase in the cost of raw materials and an anticipated rise in Japanese interest rates.

Dentsu's response to these problems has been to concentrate on what it called effective and efficient "one-stop solutions" for clients while pursuing aggressive sales.

However, Dentsu, which has more than 6,000 clients, said it would not be raising its performance forecasts for the fiscal year ending 31 March 2007 because of uncertainties in the market during the upcoming quarter.

The group expects its full-year net profit to grow by 13.2 per cent to 35.1 billion yen (£159.6 million).

Dentsu controls more than 30 per cent of Japan's total advertising market and between 40 and 50 per cent of commercial airtime in the country, which accounts for 95 per cent of its revenue.

The group did not release net profit figures for the quarter, citing a lack of data from Publicis Groupe, in which it has a 15 per cent stake.