Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Sir Martin Sorrell has warned that uncertainty over US tariffs will add to the advertising sector’s issues this year, as a pullback in spending by technology clients pushed UK marketing agency S4 Capital to a widening loss last year.
Sorrell, founder and executive chair of S4 Capital, said on Monday it was forced to book an impairment charge of £280mn in its last financial year — net of tax — to account for tough trading conditions in the second half of the year and its medium-term outlook.
The charge pushed the agency’s loss for the 12 months to the end of December to £306.9mn, from a £14.3mn loss the previous year.
S4 said revenue fell 16.1 per cent to £848mn, reflecting lower spending on marketing from technology clients, which it said were instead investing in their AI capacity. The group’s technology clients account for about half of total revenues.
Sir Martin set up S4 in 2018 after leaving WPP, taking it to a market value of more than £5bn as investors bought into his plans for a digital-led, tech-focused and heavily acquisitive UK marketing group.
However, it has suffered in recent years as clients have pulled back on marketing amid high interest rates and tougher trading conditions. After a succession of profit warnings since 2022, S4’s share price has remained near record lows, valuing the company at just over £200mn.
On Monday Sorrell said S4’s performance reflected “the impact of challenging global macroeconomic conditions, continued high interest rates and some underperformance, when compared to our addressable markets”.
He added that in 2025 “uncertainty in global economic policy, particularly tariffs” and issues like “US/China relations, Russia/Ukraine and Iran” remained “volatile”, meaning clients were “likely to remain cautious”.
The group said that it continued to cut costs last year, however, reducing its staff headcount by 7 per cent. It beat analyst expectations for net revenue and operating earnings, and ended the year with net debt of £142.mn, below the £150mn-£190mn guided range.
The board proposed a final dividend of 1p per share, amounting to £6.1mn. Shares opened about 8 per cent higher at 36p.
Analysts at Peel Hunt said that S4 had “made progress with cost control, and margins remained resilient despite the revenue decline”. But it added: “We believe a more supportive industry backdrop and stronger growth are needed for the shares to gain momentum.”
Read the full article here