Two of the UK’s mid-tier advertising outfits provided an unwelcome start to the week, with bothM&C Saatchi PLC (AIM:SAA) and S4 Capital PLC (LSE:SFOR, OTC:SCPPF) warning that trading has turned trickier as the year-end approaches.
Neither update was scheduled, which tells its own story.
M&C Saatchi’s alert centred on its Issues division, the unit that handles US federal and public-sector work.
According to the company, the US government shutdown hit activity in the fourth quarter, a crucial trading period.
Deutsche Bank’s Steve Liechti said the group had highlighted “US government shutdown pressure in important 4Q trading for the Issues business, while trading remains tough.” Saatchi insists the effect is a one-off and “with no mid/long-term effect”.
The agency reiterated that its £12 million annualised cost-saving plan is progressing and again talked up its “confidence in midterm prospects” and ongoing operational overhaul.
Investors are also being offered a sweetener in the form of a new £5 million share buyback to be executed over the next year. The Australian arm, long a source of intrigue, is under review for “options for growth/shareholder value” after its recent restructuring.
Even so, Deutsche trims its forecasts: earnings per share are now expected to fall 27% in 2025 and 20% in 2026. The broker keeps its 'buy' rating but lowers its target price from 220p to 190p. The shares closed on Monday at 119.5p.
S4 Capital’s statement made for similarly downbeat reading. This, too, arrived unexpectedly, despite the company updating the market only weeks ago with nine-month numbers.
Liechti notes that “agency trading remains tough” and that the fresh warning “follows SFOR Oct trading figures and revised forecast for 2025 with lower net revenue vs SFOR forecast”.
The pressures appear broad-based rather than pinned to a single client or unit, with some seasonal drag, slower project work, a more cautious tone from clients and a weaker-than-hoped ramp-up in new business wins.
Forecasts for adjusted earnings per share are nudged lower: minus 8% for 2025 and minus 5% for 2026. Deutsche keeps a 'hold' rating and cuts its target price from 26p to 24p. The shares ended Monday at 16.6p.
Both updates underline how sensitive the sector remains to shifts in client spending and to the patchy economic backdrop — and how little room for error there is as agencies head into the final stretch of the year.