S4 Revenue Slides, Profits Maintained

Sir Martin Sorrell's S4 Capital has reported Q3 revenue of £156 million - equivalent to a decline of 7.3% in organic terms - but continues to focus on managing costs and says it expects full year operational EBITDA of £85 million

The group was set up by Sorrell within weeks of his departure from WPP in May 2018, and enjoyed an impressive first few years, but struggled with delays in reporting of results in 2022, and began seeing falls in revenue during the following year. In March it said that despite declining revenue it would soon have positive news for investors following successful cost management, and shares jumped when half-year results showed record profit as a result. Three months later S4 says it now expects revenue for the full year to decline in the high single figures, and the market reacted by knocking almost a fifth off the share price in initial trading, despite strong, continuing profitability.

Revenue actually grew in the group's EMEA region (+3.1% like-for-like) and in Asia Pacific (+9.4%) but the Americas region is by far its biggest and here the figure was down an even 10 percent to £123.9m. by business sector, the main Marketing Services division fell 6.2% to £142.7m while Technology Services declined steeply, down 17.6% to £13.6m.

Sorrell says business remains challenging due to an uncertain global economy and geopolitical tensions, with tech companies in particular still cautious about spending. The expected full-year pre-tax operating profit of c.£85m (c. $113 million) is in line with analysts' consensus estimate, and the board says it remains confident in its strategy, client relationships and long-term growth prospects.

Web site: www.s4capital.com .