Japan ad firms Dentsu, Hakuhodo cut profit outlooks

TOKYO, Feb 9 (Reuters) - Japan's top advertising firms Dentsu Inc and Hakuhodo DY Holdings Inc cut annual profit estimates on Monday as economic worries forced their clients to tighten spending and a tumbling stock market led to devaluation losses.

Dentsu, the country's top advertising agency, now expects a group operating profit of 35.8 billion yen ($390.9 million) for the full year to March, down from a previously projected 45.3 billion yen. The latest forecast is below a market consensus of 42.7 billion yen in a poll of 13 analysts by Reuters Estimate.

The forecast for sales has been trimmed by 4 percent from the previous target to 1.87 trillion yen, said Dentsu, which competes in the global advertising market with bigger players such as Omnicom Group and WPP Group.

Smaller peer Hakuhodo, whose clients include Nissan Motor, cut its annual operating profit forecast by 18.2 percent to 13.5 billion yen, also failing to meet analysts consensus forecast of 15.1 billion yen.

The advertising giants' woes highlighted the pain felt across Japan's corporate sector as a recession deepens in the world's second-biggest economy.

"Normally, the advertising industry enjoys increased business in the years of Olympic games but this year was an exception and business conditions have been extremely tough," said Hakuhodo in a statement.

In the nine months to December, Hakuhodo reported a 53 percent drop in operating profit to 9.58 billion yen. Net profit stood at 5 million yen, down sharply from the 12.45 billion yen it posted a year ago.

Dentsu, which controls about one-fourth of Japan's advertising market, is set to report its third-quarter business results on Feb. 13.

Shares in Dentsu, owned 16 percent by foreign investors, ended trade down 5.6 percent at 1,411 yen ahead of the announcement. Hakuhodo's shares shed half a percent to close at 4,020 yen. ($1=91.57 yen)

(Reporting by Mariko Katsumura; Editing by Brent Kininmont)