S4 Capital shares surge as profit guidance improves
Digital advertising company S4 Capital shares jumped in early morning trading after reporting that activity during the final quarter was ahead of its revised guidance.
Shares surged 40.6 per cent to 27.2 pence as the company defied the challenging backdrop for advertising groups, but reported a fall in revenue.
The company anticipates full year net revenue of roughly £664m, representing a like for like drop of 8.5 per cent.
But operating profit is expected to jump 12 per cent to £75m, beating initial forecast and buoying the share price after it declined 18.5 per cent over the last twelve months after a succession of profit warnings.
The group also improved its financial position despite the drop in revenue, with net debt expected to come in lower than the current expectations of £133m and beneath the previously predicted range of £100m to £140m.
The London listed company credited the drop to a change in Treasury management and a shift in focus towards boosting working capital, which resulted in improved liquidity.
Net debt to operational profit ratio also improved, with the company ending the year with less debt than previously anticipated.
The group is expected to use just 1.1 years of profit to pay off its debt, compared to the projected 1.8 years.
1p dividend
In response to the improved performance the Board recommended a dividend of 1p, subject to the finalisation of annual results and approval of both the Board and share owners.
Sir Martin Sorrell, executive chairman of S4 Capital, said: The recommended 1p final dividend is an indication of the Board’s confidence in continued improvement.
In an increasingly volatile world, clients continue to carefully assess where they should expand geographically and how they can apply new technologies such as AI, Blockchain and Quantum to increasing efficiency.”
The group will release their annual results 26 March, providing financial forecasts for 2026.