S4 Capital says Q4 trading line

(Sharecast News) - S4 Capital said on Monday that trading in the fourth quarter was in line with the expectations outlined in November and that client caution on marketing spend was expected to persist. As a result, the group now expects a like-for-like net revenue decline of around 4% for the full year 2023, and an operational EBITDA margin of between 10% and 11%.

The company said it improved its operational EBITDA margin performance in the second half thanks to "significant" cost reductions.

S4 also said net debt was set to be towards the lower end of the guided range of £180m to £220m, with around £10m of merger payments delayed to 2024.

Executive chairman Sir Martin Sorrell said: "After four years of very strong growth, 2023 was a difficult year impacted by volatile macro conditions and, consequently, cautious spending from clients, particularly those in the technology sector and from smaller project-based assignments. Our client relationships remain strong and we have also managed costs tightly.

"While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year's level given interest rates are likely to fall over time.

"Initial indications are for an improvement in performance in the Content practice, reflecting cost reductions, broadly similar performance in Data&Digital Media to last year and a more challenging outlook for Technology Services. In these unpredictable times, we are focused on positioning the company for medium term growth, improving profitability and returning funds to shareowners."