Sir Martin Sorrell: Clients ‘cautious’ as S4 Capital’s income tumbles
S4 Capital, Sir Martin Sorrell’s advertising giant, recorded a sharp drop in revenue in its first-quarter trading update as geopolitical tensions weighed.
The firm posted a 11.4 per cent slump in net revenue to £148.3m, which it said reflected the “continuing technology client caution” and headwinds from one “key client”.
Takings from marketing services reduced to £148.3m from £162.2m for the same period last year.
Meanwhile tech services sunk to £15.4m from £24.2m.
Sorrell said: “As indicated previously, trading in the first quarter reflects the continuing impact of, to say the least, volatile global macroeconomic conditions.”
He added: “Assessing the impact of US imposed tariffs has been added to the three principal risks around US/China relations, Russia/Ukraine and Iran/Middle-East. Clients, therefore, are likely to remain cautious.”
Sorrell warned of tariff uncertainty
Sorrell has been vocal on uncertainty imposed by President Donald Trump’s erratic tariff agenda.
The London-listed marketing group’s losses widened to £306.9m at the end of 2024 from £14.3m the year prior, while revenue fell 13.6 per cent to £848.2m.
The company boss anticipated “uncertainty in global economic policy, particularly tariffs” in March 2025.
S4’s first-quarter results narrowly miss Trump’s ‘Liberation Day’ levies – which were announced on April 2 – but the firm was still hit by escalating trade tensions since the President’s inauguration in January.
Tech companies have particularly being stung by the White House’s trade offensive with Trump’s policy pivots on tariff exemptions sending markets into a whirlwind.
Shares in Apple have plummeted nearly 20 per cent for the year, and Elon Musk’s Tesla 27 per cent.
But Sorrell indicated some silver lining on the horizon as deals appear to be in progress.
“We will continue to focus on our cost base and will take further action to support profitability and expect net revenue and operational EBITDA to be broadly similar to 2024, on a constant currency basis, with a further reduction in net debt by year end to the range of £100-140m,” the firm’s chief said.
Sorell added: “Once the levels of tariffs are negotiated and impacts assessed, we believe clients will become more selective about the geographies in which they operate in order to find growth”.
S4 reiterated full-year targets despite headwinds and anticipated a “greater second half weighting than last year and usual”.
Mary Basterfield, S4 Capital’s former finance boss, announced her departure from the firm in January after handing a 12-month notice. Basterfield has served as chief financial officer since January 2022, previously working at Just Eat and Warner Music Group.