Sorrell rejects takeover talk after £6m loss at S4
ADVERTISING guru Sir Martin Sorrell admitted today to a “difficult” year due to recession fears and higher interest rates as his S4 Capital made a loss of £6 million.
Although that was better than last year’s loss of £160 million, it is still indicative of wider strife in the ad market as big tech companies pull back on spending.
Sales for the year to December fell 5.4% to just over £1 billion and there have been more than 1000 job cuts.
Sorrell, who built up advertising giant WPP before leaving in acrimonious circumstances, thinks there are some signs of recovery in the market in what should be a strong year given elections on both sides of the Atlantic.
The shares slid 6p, 13%, to 38p which leaves the business valued at £222 million. A year ago the shares were 176p when S4 was looking like becoming a plausible competitor to WPP.
A report in the US said S4 had received a takeover bid from American rival Stagwell and from private equity.
Sir Martin dismissed this talk today saying “we received nothing credible” and “we control our own destiny”.
That destiny includes a board shake-up and a new chief operating officer in Jean-Benoit Berty, a former partner at EY.
Sorrell said: “After our first four strong net revenue growth years, we had a difficult 2023 reflecting challenging global macroeconomic conditions, fears of recession and high interest rates.” He added that Berty’s “extensive management consulting experience will be of great value in focusing on the opportunities and challenges we face.”
A fall in interest rates due this year ought to encourage higher spending by clients, but S4 is more cautious than rivals about that. Both WPP and Publicis think revenues will rise this year.
S4 says clients are taking a short-term attitude to “larger transformation projects”, leading to spending cuts.