Shares in M&C Saatchi PLC (AIM:SAA) and S4 Capital PLC (LSE:SFOR, OTC:SCPPF) sank 6% and 7% after both groups warned that 2025 will fall short of expectations.
The updates underline how fragile demand remains across the advertising and marketing landscape, where budgets are still being trimmed and visibility is patchy as clients head into the year-end planning season.
M&C's warning stems from a source few in the sector had on their bingo card: the prolonged shutdown of the US government.
Peel Hunt notes that the Issues division, which handles public-sector and policy-focused work, saw projects frozen for longer than expected because funding approvals were halted.
With the shutdown now resolved, work should restart quickly, but the financial hit for this year is already baked in.
The agency now expects full-year profit to land “materially below” market expectations, with like-for-like revenue down about 7% (or 1.5% excluding the troubled Australian arm) and operating profit of £26-28 million, implying margins of roughly 12.5-13%.
Earlier guidance had pointed to only a mid single-digit revenue decline and profit broadly flat on last year.
Peel Hunt has chopped its 2025 forecasts, cutting revenue by 3% and earnings per share by 28%. The broker has trimmed its target price from 185p to 115p and moved the stock to Hold.
Management is keen to stress that the Issues business tends to be defensive and should return to double-digit growth next year. It has also nudged sentiment with a modest £5 million share buyback, with scope to extend it later.
Even so, the scale of the downgrade so close to year-end will jar. Peel expects investors to be disappointed and notes that wider client caution leaves an uneasy backdrop as 2026 planning gets underway.
If M&C’s problem was unexpected, S4 Capital’s was depressingly familiar.
The group released an unscheduled trading update after reviewing October performance and third-quarter forecasts, which had worsened. Like-for-like net revenue is now expected to fall 10% for the year, with operational EBITDA at £75 million.
That is 8% below the market’s expectations and 11% shy of Peel Hunt’s own numbers.
Marketing services remain a tough space, and S4’s late-season downgrade leaves little room to pull cost levers quickly enough to salvage margins.
Net debt is still expected to land between £100 million and £140 million, but Peel Hunt plans a full forecast review. The shares, already trading on about three times expected 2026 earnings before the update, are likely to face further pressure.
For both groups, the tone is the same: the ad market has yet to shake off its funk. Project delays, budget caution and a lack of fourth-quarter bounce have combined into another round of guidance cuts.
Investors hoping for a cleaner start to 2026 may need to keep their guard up.