- S4 Capital said like-for-like net revenue fell 4.5% to £873.2 million
- The company expects total like-for-like net sales to decline in 2024
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S4 Capital’s revenue fell last year for the first time since its inception as clients cut back on advertising spend amid greater economic uncertainty.
Sir Martin Sorrell’s company announced that like-for-like net revenue fell 4.5 percent to £873.2 million in 2023, after double-digit growth over the past four years.
The ad agency said corporate clients were taking an increasingly short-term attitude to “larger transformation projects”, leading to longer sales cycles and cutbacks at some smaller clients.
S4 Capital shares were 6.6 percent lower at 41.6 cents on Wednesday morning, meaning they have fallen by more than three-quarters in the past twelve months.
Falling revenue: Sir Martin Sorrell’s S4 Capital revealed like-for-like net revenue fell 4.5 percent to £873.2 million in 2023
This particularly affected the group’s content practice, where net sales fell by 10 percent as some technology companies cut their marketing budgets.
Tech companies have dramatically scaled back expansion since pandemic-related restrictions were eased and higher interest rates began significantly driving up financing costs.
While central banks are expected to cut interest rates soon, S4 Capital expects total like-for-like net revenues to decline in 2024 due to market unpredictability and poor prospects for the technology services division.
“Comparatives with 2023 will be difficult in the first half and easier in the second half,” the London-listed group told investors.
“We expect the year to be heavily weighted in the second half of the year, with improving end markets and our normal seasonality.”
Sir Martin Sorrell said: ‘After our first four years of strong net sales growth, we had a difficult 2023 due to challenging global macroeconomic conditions, recession fears and high interest rates.
‘This resulted in reluctance from customers to engage and extended sales cycles, especially for larger projects, a difficult year for new customers, and a reduction in spend at some regional and smaller customer relationships.
‘We aim for like-for-like net sales for 2024 to be lower than the previous year, with broadly comparable profit levels to 2023.’