Advertising guru Sir Martin Sorrell today warned of a tough year ahead, a blow to Tory hopes of an economic before an election likely in November.
The former WPP chief has been building a digital competitor in S4 Capital, with some ups and downs along the way.
He was cautious today warning there was unlikely to be an economic improvement this year.
It thinks revenue will be down about 4% as tech clients hold back on spending.
Sir Marin, the former WPP executive sometimes dubbed the “Sage of Soho” for his reading of markets, was glum today.
He said this morning: “After four years of very strong growth, 2023 was a difficult year impacted by volatile macro conditions and, consequently, cautious spending from clients, particularly those in the technology sector and from smaller project-based assignments. Our client relationships remain strong and we have also managed costs tightly."
S4 shares edged up 1p to 42p, leaving the business valued at £245 million. The stock is down 80% in the last year.
He added: "While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year's level given interest rates are likely to fall over time. Initial indications are for an improvement in performance in the Content practice, reflecting cost reductions, broadly similar performance in Data&Digital Media to last year and a more challenging outlook for Technology Services. In these unpredictable times, we are focused on positioning the Company for medium term growth, improving profitability and returning funds to shareowners."
Broker Peel Hunt said in a note to clients: "It is comforting to see that trading has not got worse for S4. Expectations are low for (the full year) and our forecasts assume close to no growth for the year. Acceleration in client spend combined with S4’s cost control could materially lift profits, in our view. However we have yet to see signs of a change, especially in tech client spend."
