Martin Sorrell's S4 Capital warns on economic and geopolitical volatility as losses widen

Sir Martin Sorrell, the head of S4 Capital, has sounded the alarm that the London-listed marketing group will continue to face significant challenges from global economic volatility into 2025, as the company's losses have drastically widened.

In a statement, Sorrell highlighted the ongoing impact of high interest rates, underperformance, and cautioned about "uncertainty in global economic policy, particularly tariffs" extending into 2025, as reported by City AM.

Furthermore, he noted that geopolitical tensions, such as those between the US and China, as well as Russia's ongoing conflict in Ukraine, would likely lead clients to "to remain cautious" into 2025.

The company's financials revealed a substantial increase in losses, reaching £306.9m, a stark contrast to the £14.3m loss reported the previous year.

Additionally, revenue plummeted by 13.6% to £848.2m. S4 attributed this decline to technology clients redirecting their spending towards AI-related ventures rather than marketing expenditures.

The company has set a goal to achieve "broadly similar" net revenue and operational pre-tax earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the upcoming year. However, operational EBITDA took a hit, falling 6.3% to £87.8m for the year ending December 31.

Over the past 12 months, S4 Capital's shares have taken a 27.1% tumble following a series of profit warnings. Sorrell reflected on the company's performance in 2024, stating, "Our performance in 2024 reflected the impact of challenging global macroeconomic conditions, continued high interest rates and some underperformance, when compared to our addressable markets."

"Technology clients prioritised capital expenditure over operating expenditure, such as marketing and our Technology Services Practice was affected by a reduction in one of our larger relationships."

He added: "Despite this, the Company reduced its cost base significantly, increased its operating margins and reduced its net debt markedly. ".

S4 Capital's CFO Mary Basterfield resigned from her role in January after a three-year tenure.