Sorrell insists the outlook is ‘relatively bright’ for beleaguered digital ad company S4 despite war in Europe and soaring inflation
Sir Martin Sorrell applauded investors in his beleaguered digital advertising company S4 Capital saying the outlook was “relatively bright” despite war in Europe and soaring inflation.
The shares rose 12.5%, or 17.9p, to 161.4p, although it reported operating losses which more than quadrupled to £75.4m in the first half.
Figures showed revenue continued to grow, up 59.8% to £446.4m, and two ‘whopper’ clients had been signed.
Confident: Sir Martin Sorrell founded S4 Capital in 2018 after three decades at the helm of advertising giant WPP. It now employs more than 9,000 people
Sorrell founded S4 Capital in 2018 after three decades at the helm of advertising giant WPP. It now employs more than 9,000 people.
He was forced to delay his annual results this year, in a move the tycoon called “unacceptable and embarrassing”, and warned of a drop in profits in July as recruitment costs rose.
His woes have left shares down 75% year-to-date.
But he has now put the brakes on his hiring spree and signaled a shift in focus from buying small businesses to maximizing the value of his existing business.
Winning clients in the first half included Adobe, Brewdog, Tiktok, Diageo and online company Booking.com as well as the US account of a major no-name consumer goods company.
Sorrell sounded an optimistic note. He acknowledged “many significant challenges in areas such as climate change, a long war with continental Europe, rising inflation and interest rates, energy shortages, US-China relations and Western/Russian and with Iran”.
But he said that despite this, “the outlook for digital advertising and transformation remains relatively bright, while traditional media languishes.”
“Demand is proven to accelerate during times of economic uncertainty, as we saw with Covid in 2020 when we had good results,” Sorrell added.
He admitted first-half profit performance was “disappointing” as cost growth outpaced sales, but said S4 was moving to correct it.
‘Whopper’ customers – those with annual incomes above $20m (£17.6m) – now total eight, while another five were ‘tending’ to that status as it targets a total of 20.
