Sorrell’s S4 Reiterates 2022 Outlook Despite Fall in HY Core Earnings

By Scott Kanowsky 

Investing.com — Shares in S4 Capital PLC (LON:) jumped on Wednesday after the U.K. media group backed its full-year profit outlook despite a slide in core earnings in the first half.

The agency, started by advertising executive Martin Sorrell after his departure from rival WPP (LON:), reiterated its guidance for annual operational income before interest, taxes, depreciation and amortization at about £120M, buoyed by expectations for “significantly stronger” results in the second half. The annual target was previously cut in July.

S4 added that it was well positioned to handle potential headwinds to global growth, particularly from soaring inflation and the conflict in Ukraine.

“[T]he prospects for digital advertising and transformation remain relatively bright, whilst traditional media languish, and there is evidence that demand accelerates during periods of economic uncertainty as we saw with Covid in 2020, when we performed strongly,” S4 said in a statement.

In the six months ended on June 30, reported operational profit dipped by 12.4% year-on-year to £30.1M, due mainly to heavy spending on hiring new employees.

But the group posted a 59.8% surge in revenue during the period. S4 said it is also instituting tight cost management measures, including a brake on acquiring talent, with the number of workers recently stabilizing at around 9,100.

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