Hakuhodo DY Holdings (2433): FY2025 Results Summary — Operating Income Up 18.9% on Cost Control and Structural Reform

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Hakuhodo DY Holdings reported its consolidated results for FY2025 (April 2025-March 2026) on May 12, 2026. Billings were 1,580,460 million yen, down 32,641 million yen or 2.0% year on year, while operating income rose 7,094 million yen, or 18.9%, to 44,675 million yen and net income attributable to owners of parent increased 6,006 million yen, or 55.8%, to 16,775 million yen. The company states that profitability steadily improved due to the control of SG&A expenses and the effects of structural reforms. Note that the company labels the fiscal year ended March 31, 2026 as “FY2025”; the year ending March 31, 2027 is referred to as “FY2026” throughout its materials.

Consolidated Results (Full-Year Actual)

Operating income and ordinary income both exceeded the company’s own forecast, by 4,675 million yen (+11.7%) and 3,061 million yen (+7.1%) respectively, while billings came in 69,539 million yen (-4.2%) below forecast and net income attributable to owners of parent fell 3,224 million yen (-16.1%) short of forecast. Revenue for the year was 861,003 million yen, down 92,313 million yen or 9.7% year on year.

Item (Millions of JPY)	FY2025 Actual	YoY	YoY %	Difference from Forecast
Billings	1,580,460	-32,641	-2.0%	-69,539 (-4.2%)
Gross Profit	406,037	+6,438	+1.6%	—
Operating Income	44,675	+7,094	+18.9%	+4,675 (+11.7%)
Ordinary Income	46,061	+3,400	+8.0%	+3,061 (+7.1%)
Net Income Attributable to Owners of Parent	16,775	+6,006	+55.8%	-3,224 (-16.1%)
Operating Income before Amortization of G/W	57,401	+4,149	+7.8%	+3,901 (+7.3%)

On the company’s Japanese GAAP income statement, SG&A expenses were 361,361 million yen, down 655 million yen or 0.2%, and the operating margin was 11.0%, up 1.6pt. Amortization of goodwill — which the company defines as the total of goodwill amortization required under Japanese GAAP and amortization of intangible assets following business combinations — declined 2,944 million yen, or 18.8%, to 12,725 million yen. Net income before amortization of goodwill was 29,501 million yen, up 3,062 million yen or 11.6%.

Results After Adjustments

The company also presents figures “after adjustments,” which exclude the impact from the sale of shares in Mercari, Inc. held by UNITED, Inc., an equity method affiliate. On this basis, operating income before amortization of goodwill rose 14.8%, which the company notes exceeds the current Medium-Term Business Plan target of a CAGR of 10% or higher, and both efficiency indicators — gross margin and operating margin before amortization of goodwill — improved by more than 1pt year on year.

Item (Millions of JPY) — After Adjustments	FY2025 Actual	YoY	YoY %
Billings	1,580,460	-29,374	-1.8%
Gross Profit	406,037	+9,694	+2.4%
SG&A	361,361	-656	-0.2%
Personnel/Other	348,635	+2,289	+0.7%
Amortization of Goodwill	12,725	-2,944	-18.8%
Operating Income	44,675	+10,350	+30.2%
Operating Income before Amortization of G/W	57,401	+7,405	+14.8%
Gross Margin	25.7%	+1.1pt	—
Operating Margin before Amortization of G/W	14.1%	+1.5pt	—

The company attributes the increase in operating income before amortization of goodwill to cost control in the first half and gross profit growth in the second half, noting that gross profit entered a recovery trend from Q3 onwards and that this growth offset the increase in SG&A expenses.

Results by Region

Japan/Corporate achieved a 4.6 billion yen increase in profit for the full year, driven by strong growth in gross profit in the second half. Overseas, cost reductions through structural reforms offset top-line stagnation in the Greater China region and ASEAN, leading to a 2.8 billion yen increase in profit. Overseas operating income remained negative at -2,223 million yen, but improved by 5,316 million yen year on year; on an operating income before amortization of goodwill basis, the overseas business posted 8,547 million yen, up 47.9%.

Region (Millions of JPY)	Item	FY2025 Actual	YoY	YoY %
Japan	Billings	1,363,926	-15,970	-1.2%
Japan	Revenue	644,469	-75,642	-10.5%
Japan	Gross Profit	304,654	+7,557	+2.5%
Japan	SG&A Expenses	218,460	+3,317	+1.5%
Japan	Operating Income	86,193	+4,239	+5.2%
Overseas	Billings	226,054	-16,650	-6.9%
Overseas	Revenue	226,054	-16,650	-6.9%
Overseas	Gross Profit	107,359	-540	-0.5%
Overseas	SG&A Expenses	109,582	-5,857	-5.1%
Overseas	Operating Income	-2,223	+5,316	n/a
Elimination or Corporate	Billings	-9,520	-19	—
Elimination or Corporate	Gross Profit	-5,975	-577	—
Elimination or Corporate	Operating Income	-39,293	-2,461	—
Consolidated	Billings	1,580,460	-32,641	-2.0%
Consolidated	Revenue	861,003	-92,313	-9.7%
Consolidated	Gross Profit	406,037	+6,438	+1.6%
Consolidated	Operating Income	44,675	+7,094	+18.9%

Japan: Billings by Type of Service and Client Industry

In Japan, total billings by type of service were 1,322,925 million yen, down 8,494 million yen or 0.6%. Internet Media billings rose 1.0% to 357,412 million yen and Outdoor Media rose 9.1% to 39,653 million yen, while Traditional Media Service billings fell 1.6% to 407,207 million yen. Billings in the internet advertising domain were 431,544 million yen, up 3,661 million yen or 0.9%, accounting for 32.6% of the total.

Type of Service (Millions of JPY)	FY2025 Actual	YoY	YoY %	Composition
Traditional Media Service Subtotal	407,207	-6,614	-1.6%	30.8%
Television	369,389	-2,131	-0.6%	27.9%
Internet Media	357,412	+3,428	+1.0%	27.0%
Outdoor Media	39,653	+3,309	+9.1%	3.0%
Media Service Subtotal	804,273	+123	+0.0%	60.8%
Creative	168,534	+5,687	+3.5%	12.7%
Marketing/Promotion	307,215	-15,726	-4.9%	23.2%
Other (Content, etc.)	42,903	+1,420	+3.4%	3.2%
Non-Media Service Subtotal	518,652	-8,618	-1.6%	39.2%
Total	1,322,925	-8,494	-0.6%	100.0%
Internet Advertising Domain Billings	431,544	+3,661	+0.9%	32.6%

By client industry, total billings in Japan were 1,234,301 million yen, down 3,484 million yen or 0.3%. The company identifies Finance/Insurance (91.6 billion yen, up 11.3 billion yen or 14.1%) and Medical services/Education/Religion (21.3 billion yen, up 7.4 billion yen or 53.3%) as positive industries, and Government/Organizations (54.9 billion yen, down 25.9 billion yen or 32.1%) and Distribution/Retailing (45.6 billion yen, down 15.2 billion yen or 25.0%) as negative industries. Information/Communications remained the largest category at 159,617 million yen, up 3.5%, or 12.9% of the total. Effective from FY2025 the company revised the companies included in these calculations.

FY2026 Forecast

For FY2026 the company forecasts billings of 1,675,000 million yen (+6.0%), revenue of 910,000 million yen (+5.7%) and operating income of 46,700 million yen (+4.5%). Net income attributable to owners of parent is forecast at 26,000 million yen, up 55.0%. The company notes that the current forecast does not incorporate significant extraordinary incomes or losses.

Item (Millions of JPY)	FY2026 Forecast	YoY	FY2025 (Actual)
Billings	1,675,000	+6.0%	1,580,460
Revenue	910,000	+5.7%	861,003
Gross Profit	430,000	+5.9%	406,037
Operating Income	46,700	+4.5%	44,675
Ordinary Income	47,000	+2.0%	46,061
Net Income Attributable to Owners of Parent	26,000	+55.0%	16,775
Operating Income before Amortization of G/W	60,000	+4.5%	57,401

Shareholder Returns

The dividend for FY2025 (ending March 2026) will be 32 yen per share annually, including the interim dividend already paid, and the dividend forecast for FY2026 (ending March 2027) is also 32 yen per share annually. During FY2025 the company purchased 10,000 million yen of treasury shares and paid 11,726 million yen in dividends, as shown in its cash flow statement.

The company continues its initiatives to “improve capital efficiency” based on the disclosure in May 2025. In FY2025, in addition to the significant increase in net income attributable to owners of parent (+55.8% YoY), it continued the acquisition and cancellation of own shares and the sale of cross-shareholdings; as a result, ROE before amortization of goodwill — the capital efficiency KPI of the current Medium-Term Business Plan — improved to 7.6%, up 0.7pt year on year. The company expects to achieve the target of ROE before amortization of goodwill of at least 10% in FY2026 as well, driven by continued profit growth, and recognizes that further initiatives toward capital optimization are necessary to improve capital efficiency more stably. It plans to promptly disclose the details of specific measures as soon as they are finalized.

Medium-Term Business Plan Progress

Under the Medium-Term Business Plan covering FY2024-FY2026, the group aims to evolve beyond the framework of a group of advertising companies into a “creativity platform” with strengths in six business domains, through three enhancement measures: restructuring of the marketing business, creation of new growth options, and remodeling of the global business. Against the FY2026 KPIs, the full-year FY2025 results were a CAGR of operating income after adjustments and before amortization of goodwill of +14.3% (target: at least +10%), a CAGR of gross profit after adjustments of +2.3% (target: at least +5%), an operating margin after adjustments and before amortization of goodwill of 14.1% (target: at least 13%) and ROE before amortization of goodwill of 7.6% (target: at least 10%).

Medium-Term Business Plan Indicator	Medium-term target (for FY2026)	Full-year result for FY2025
CAGR of operating income after adjustments and before amortization of goodwill	At least +10%	+14.3%
CAGR of gross profit after adjustments	At least +5%	+2.3%
Operating margin after adjustments and before amortization of goodwill	At least 13%	14.1%
ROE before amortization of goodwill	At least 10%	7.6%
CAGR of gross profit in domestic marketing business	Approx. +4%	+3.2%
Operating margin of domestic marketing business before amortization of goodwill	At least 15%	19.4%
CAGR of gross profit in domestic digital marketing	At least +10%	+3.4%
CAGR of gross profit of the four business domains combined	Approx. +5%	+14.4%
CAGR of gross profit in global business	Above-market growth	-0.4%
Operating margin of global business before amortization of goodwill	Approx. 10%	4.9%

Topics

In the marketing business, the company established a Group Account Strategy Division to maximize overall Group competitiveness, with a Group-wide target of gross profit +5.9% and an operating margin of 14%. It reports that integration synergies were realized at Hakuhodo DY ONE — formed from predecessors DAC and IREP — improving OM by 3.4% by consolidating overlapping functions, and that the participation of Digital Holdings in the Group helped it achieve the No. 2 share in domestic digital advertising billings, with the aim of reaching No. 1. Unified operations of Hakuhodo and Hakuhodo DY ONE produced a win rate of approximately 70% in competitive pitches in FY25, and the expanding next-generation video advertising domain generated over 30.0 billion yen in sales.

On AI, the company reports that it provided generative AI training to more than 30,000 staff on a cumulative basis and introduced a reverse mentoring system in which junior staff advise management. In the five growth domains, the consulting business acquired large accounts and projects exceeding 10.0 billion yen, including a consumer goods manufacturer account of over 10.0 billion yen and an infrastructure company account worth several billion yen a year over several years. In content and IP, the company established Chapter-I, a joint venture with South Korean entertainment company CJ ENM, and acquired shares in Amuse Sports Holdings, which commenced operations as HAKUHODO Athlete Solution Inc.

On sustainability, the company formulated Basic Procurement Policies and Guidelines and updated its Environmental Policy, setting new 2030 targets with a 2023 base year covering consolidated domestic and international operations: a 50% reduction in Scope 1 and 2 emissions, a 25% reduction in Scope 3 emissions, and 100% adoption of renewable energy by 2030.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.