Sir Martin Sorrell’s S4Capital upgrades profits again

Sir Martin Sorrell’s ad agency S4Capital issued another profit upgrade as the company revealed it continues to benefit from the global recovery.

Bosses at the company set up by the advertising guru in 2018 said business in the past few months has been particularly strong as countries start to ease Covid-19 restrictions and companies increase marketing spends further.

S4Capital said: “Activity has continued at unprecedented levels in May and June, driven both by the post-pandemic rebound in global GDP (gross domestic product) and the acceleration in digital marketing transformation.”

It added: “Like-for-like revenue and gross profit (or net revenue) growth both continued at levels beyond expectations.”

Bosses also said they will now turn their attention to expanding the business into technology services and broaden its content division and data and digital media practices in the Americas and Asia-Pacific regions.

Sir Martin Sorrell
Sir Martin Sorrell’s S4Capital has seen a boost in spending as the Covid restrictions ease (Aaron Chown/PA)

It came as S4Capital revealed that a new agreement has been signed with Credit Suisse, HSBC and Barclays Bank for a new seven-year, 375 million euro (£322 million) loan deal and a £100 million five-year credit facility with the three lenders, alongside JP Morgan and BNP Paribas to refinance current ones.

The deal will also provide approximately £200 million for general corporate purposes, including to fund future mergers, it added.

S4Capital has gone from strength to strength since being launched by Sir Martin months after his acrimonious departure from WPP.

He left the world’s largest advertising group in April 2018 after an investigation into his personal conduct.

Sir Martin denied wrongdoing and was allowed to depart as a “good leaver”. He remains one of WPP’s top 10 shareholders.

Last month S4Capital said it believes net revenues growth in the first quarter of the financial year will be 35%, compared with previous expectations of 30%.

The move follows a similar uplift in forecasts in May, where the figure was raised from 25% to 30%.

No details were provided for the expected uplift under the new guidance issued on Monday.

The company has grown quickly through a series of acquisitions, including 11 takeovers in the past 12 months. It employs 5,500 staff across 31 countries.

Sir Martin said last month that tech clients, which make up more than half of S4Capital’s revenues, are outspending consumer goods, pharmaceutical and retail clients.