ADK income rises on flat billings

In its results for this year’s Q1 to Q3 period, ADK has reported a 9.2% year-on-year increase in consolidated operating income to 4.6 billion yen (US$40.4 million). Consolidated operating income in Japan fell 3.2% to 503 million yen ($4.4 million).

Consolidated gross profit rose 5.2% to 39.4 billion yen ($346 million), while consolidated gross billings were up 0.6% to 258.6 billion yen ($2.2 billion).

In the report, ADK claims to be driven by digital as well as TV. While gross digital billings rose 22.2% to 18.2 billion yen ($160 million), that still accounts for less than 8% of total business against TV’s 50.4%. Gross TV billings increased 6.3% to 116.9 billion yen ($1 billion).

Marketing and promotion saw the biggest slump, down 15.4% to 38.3 billion yen ($337 million). ADK also noted a slowdown in its domestic advertising subsidiary ADK International and its content business. It said that Gonzo, an anime studio it bought last year, fell short of its forecast.

The company has seen an increase in business from ADK Arts, an internal production company, and ADDC, a digital media rep.

In terms of sectors, automotive billings, which make up 4% of the total, fell more than 33%. The highest increase (38.9%) came from the home appliances and AV sector, which accounts for 1% of total billings.

ADK’s international business represents a low base, but the company cited year-on-year profitability in Asia, China, the EU and US. International business accounted for 8.6% of total billings against 7.5% for the same period last year. Overall, the company forecasts full-year consolidated operating income of 6.2 billion yen ($54 million), up 12% on 2016.

ADK reiterated its position on the ongoing buyout bid by Bain Capital. The US private equity company is seeking to buy ADK for $1.3 billion amid resistance from WPP, ADK’s biggest shareholder. WPP has been outspoken in its criticism of ADK's investments in peripheral businesses in areas such as anime. Bain's tender offer will expire on 21 November.