Sir Martin Sorrell’s S4 Capital ups 2021 outlook

The digital advertising agency run by Sir Martin Sorrell has increased its full-year revenues outlook after surging first-quarter sales.

S4 Capital said it is now expecting 30% like-for-like revenue and gross profit growth this year, up from 25% previously, with the group also targeting a strong earnings margin.

It came as the group posted a 35% surge in like-for-like revenues to £122 million for the first three months of 2021, with comparable gross profits up 33% to £104 million.

S4 Capital said it believes digital advertising will grow 20% a year due to the shift online driven by the pandemic and expectations for a marked bounceback in global gross domestic product (GDP) in 2021 and 2022.

Sir Martin, former boss of global ad giant WPP and now the executive chairman of S4 Capital, said: “We are extremely optimistic about our prospects for this year and next, given the huge global fiscal and monetary stimulus introduced to counter the impact of the pandemic and the subsequent increase in consumer savings ratios and stagnation of corporate capital investment.”

Global growth is now predicted to jump by up to 6% in 2021 and as much as 5% in 2022 after plunging in 2020 due to the Covid-19 crisis.

But Sir Martin warned that the rebound may falter when countries bring in austerity measures to cut debt built up during the pandemic.

He added: “The chickens may well come home to roost in 2023, given the debt burden that most countries will have and the tax increases that will have to be implemented.

“But digital marketing expenditure remains robust, even in a recession, as our results last year demonstrate.”

The firm said new business activity has been “frenetic”, with a pipeline of business “significantly” ahead of a year earlier.

It added that there is now a “strong” chance of achieving its target to double in size within three years.

First-quarter figures showed all areas enjoyed solid growth in the first quarter, with like-for-like revenues up 30% in the Americas, 44% ahead across Europe, the Middle East and Africa, and 34% higher in Asia Pacific.

The group separately announced that its MightyHive digital media services arm has agreed to  merge with Brazil’s Raccoon Group for an undisclosed sum, in a move that will boost its presence in Latin America.