S4 Capital warns on full-year profits

(Sharecast News) - Martin Sorrell's advertising firm S4 Capital warned on Monday that full-year profit was set to miss consensus expectations, pointing in part to client caution. Following a third-quarter trading update earlier in the month, the company said it has now reviewed its financial results for October and the third-quarter revised forecast for 2025, which show a drop in net revenue versus the forecast and therefore impact the fourth-quarter performance.

S4 Capital said 2025 like-for-like net revenue is now expected to be down by just under 10%.

"Despite the cost actions we have already taken this year, this decline in net revenue will impact our operational EBITDA, which we are now targeting to be approximately £75m, below the current market consensus of £81.6m," it said.

As well as client caution, the group cited lower project-based revenue and a slower-than-expected ramp-up of new business wins.

Nevertheless, S4 said its liquidity continues to improve more than expected and its targeted range for year end net debt remains £100m to £140m.

At 0838 GMT, the shares were down 4.1% at 16.98p.

Peel Hunt, which rates the stock at 'hold' with a 25p price target, said: "It is clear that the market for marketing services currently is not an easy one.

"For S4, given it is so late in the year, the company has limited room for cost action to improve profitability for FY25. No doubt there is likely to be further weakness today in the shares, which trade on 3x FY26E PE (prior to the update)."