Sir Martin Sorrell’s S4 Capital advertising empire crashes to near all-time low

Company’s reliance on technology sector leaves it exposed to decline in Silicon Valley spending

Sir Martin Sorrell is under renewed pressure after shares in his advertising empire S4 Capital slumped close to an all-time low after a fresh warning over sales.
The ad giant warned full-year sales would fall by more than previously expected, spooking investors who sent shares crashing by as much as 16pc near to their lowest level of all time. 
S4, founded by Sir Martin six years ago, now has a market value of around £262m, down from its high of £5bn in 2021. 
The 79-year-old personally owns 9pc of the company, meaning the share price decline has also hit him in the pocket. 
The London-listed business was founded by Sir Martin following his acrimonious departure from WPP.
The group has been left particularly exposed due to its reliance on major tech clients such as Amazon and Google amid a recession in the advertising market.
Revenues of £423m in the first half of the year were down more than 18pc on last year.
Sir Martin blamed the falling sales on the “challenging global macroeconomic conditions and high interest rates”, with large tech clients in particular cutting back their spending.
The slowdown has hit other advertising rivals, with WPP last month downgrading its full-year revenue forecasts amid lower sales in China and wider economic woes.
S4 capital has rolled out a number of cost-cutting measures, slashing nearly 1,000 jobs over the last year and cutting back on discretionary spending such as travel. 
Bosses said they expected to reduce costs further in the second half of the year.
The measures helped to trim pre-tax losses to £13.7m from £21.8m last year. 
Net debt jumped to £183m from £109m due to the company launching its first share buyback and planned merger payments.
S4 said it continued to gain new business activity, with a particular focus on artificial intelligence. 
The company signed a new deal with General Motors, which it said will be its latest “whopper” – a client worth more than $20m (£15m) per year in revenues.
S4 grew rapidly in its first few years, winning major clients and expanding through acquisitions.
But its expansion plans were derailed by accounting blunders that forced the company to delay its financial results twice, while it has since issued a number of profit warnings after falling short of its optimistic revenue forecasts.
Sir Martin said: “We remain confident in our strategy, business model and talent, which together with scaled client relationships position us well for growth in the longer term, with an emphasis on deploying free cash flow to improve share owner returns, now all significant combination payments have been made.”