Sir Martin Sorrell’s S4 Capital reported a sizable increase in operating losses in the six months to June 30, 2022, reflecting rising costs due to hiring in its content division.
“The Content practice operational EBITDA margin was 5.6%, compared to 10.7% last year, reflecting increased investment in human capital in the first half of the year to staff “whoppers” and prepare for a stronger second half,” the company said in its first half report.
At the interim stage, the company’s loss came in at £75.4mln compared to £16.6mln in the six months of 2021. Its operational EBITDA dropped 12.4% to £30.4mln, while billings rose 39.8% to £765.6mln on a reported basis and revenues of £446.4mln were up 59.8% on a reported basis.
“In the first half of 2022, we continued to invest in increased human capital ahead of further top line advances and in management infrastructure, which impacted our operational EBITDA,” Sorrell said a statement.
“In the second half, we are focused on a better balance between top and bottom-line growth to ensure we reach our revised targets for the year. Whilst the global economy faces many significant challenges … the prospects for digital advertising and transformation remain relatively bright,” he added.
The market reacted positively with shares currently up 12.5% at time of publication.
Looking ahead the company said that its full-year like-for-like gross profit/net revenue growth target “remains unchanged at 25%.”
“Whilst the global economy faces many significant challenges … the prospects for digital advertising and transformation remain relatively bright, whilst traditional media languish,” added Sorrell.
Since starting S4 Capital following his departure from WPP, Sorrell has pursued an aggressive acquisition strategy buying 30 media groups in just under four years.