Sir Martin Sorrell has warned that Donald Trump’s tariffs will damage his advertising empire this year after a slowdown in the tech sector hammered profits.
The executive chairman of S4 Capital said 2025 would be challenging because of “significant volatility and uncertainty in global economic policy, particularly tariffs”.
“In geopolitics, US [and] China relations, Russia [and] Ukraine and Iran remain volatile issues and therefore clients are likely to remain cautious,” he warned.
Sir Martin, who founded S4 after leaving ad giant WPP seven years ago, blamed macroeconomic conditions for a worsening performance in 2024, when S4 posted a loss of £307m, compared to £14m the previous year.
This was driven by a £280m non-cash impairment charge, which the company said reflected trading conditions in the second half of the year and changes to its medium-term outlook.
S4, which counts Google and Amazon as clients, has been hit by lower marketing spend by tech firms amid rising interest rates and a broader economic slowdown.
The company added that tech giants are investing heavily to expand their artificial intelligence capabilities. As a result, S4’s revenues dropped by more than 16pc last year to £848m.
The tech slowdown has led to a sharp reversal in fortunes for Sir Martin’s company, whose market value peaked at around £5bn in 2021 amid rapid acquisition-fuelled expansion.
But shares have since slumped close to a record low, with the company now valued at around £220m.
S4 has embarked on a number of cost-cutting measures in a bid to shore up its balance sheet. The company’s headcount fell 7pc last year to around 7,200, with bosses adding: “We will continue to focus on our cost base and will take further action to support profitability.”
Despite the widening loss, S4 said it would pay its first ever dividend of 1p per share, amounting to roughly £6.1m. Shares jumped 10pc following the announcement.
Sir Martin added that the company expected to benefit from new business in the second half of the year. S4 forecast revenue and operating profit broadly in line with 2024, while net debt is expected to reduce to between £100m and £140m.
Fiona Orford-Williams, an analyst at Edison Group, said: “The market for technology services is particularly affected by attention and budgets being dominated by the current focus on AI.
“This shift in emphasis is part of a wider transition and S4 is itself using AI extensively. Clients are dipping in their toes to deliver use cases that can be further developed, with growing confidence in the use case for copywriting and visualisation.”
