September 24, 2022

Sir Martin Sorrell cheered up investors at his beleaguered digital ad firm S4 Capital, saying the outlook is “relatively bright” despite the war in Europe and rising inflation.

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Shares rose 12.5%, or 17.9p, to 161.4p, despite operating losses more than quadrupling to £75.4m in the first half of the year.

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The figures showed that revenues continued to rise, up 59.8% to £446.4m, and that two ‘huge’ clients had been signed.

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Confident: Sir Martin Sorrell founded S4 Capital in 2018 after three decades at the helm of advertising giant WPP. Now the company employs more than 9,000 people.

Sorrell founded S4 Capital in 2018 after managing ad giant WPP for three decades. Now it employs more than 9,000 people.

The company was forced to delay its full-year results for this year, which the mogul called “unacceptable and shameful” and warned of lower profits in July due to soaring hiring costs.

Its woes have left stocks 75 percent lower in the year to date.

But now it has put a brake on hiring and signaled a shift in focus from buying smaller companies to maximizing the value of existing businesses.

Customers winning in the first half included Adobe, Brewdog, Tiktok, Diageo and online firm, as well as a U.S. account of an unnamed major consumer products company.

Sorrell sounded optimistic. He acknowledged “many serious problems in areas such as climate change, a protracted war with continental Europe, rising inflation and interest rates, energy shortages, complex relations between the US and China and the West and Russia, and with Iran.”

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But despite this, he said that “the outlook for digital advertising and transformation remains relatively bright, while traditional media languishes.”

“There is evidence that demand is accelerating during periods of economic uncertainty, as we saw with Covid in 2020 when we performed well,” Sorrell added.

He acknowledged first-half earnings performance was “disappointing” as cost growth outpaced sales, but said S4 acted to rectify that.

‘Huge’ clients – those with annual revenues in excess of $20m (£17.6m) – now number eight, while another five are ‘aspiring’ to the status as it targets 20.