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S4 Capital highlights continued profit growth despite coronavirus disruption

The digital advertising and marketing firm said the pipeline of its content mandatory practice, which contributes over two-thirds of its revenues and gross profit, had started at a higher level in June than the previous month

S4 Capital PLC - S4 Capital highlights continued profit growth despite coronavirus disruption

S4 Capital PLC (LON:SFOR) has highlighted that its like-for-like (LFL) gross profit has “remained in positive territory” despite economic disruption caused by the coronavirus pandemic.

In a statement to be delivered at its AGM on Monday, the digital advertising and marketing firm said while growth rates for its revenue and gross profits were lower in April than its first quarter as the pandemic hit, gross profit LFL remained positive at well over 3% and that there were “early indications” that the May figure will be stronger.

READ: S4 Capital jumps as first quarter revenues surge

S4 also said that in June the pipeline of its content mandatory practice, which contributes over two-thirds of its revenues and gross profit, had started at a higher level than the previous month.

Meanwhile, the company’s executive chairman Sir Martin Sorrell said the company was “confident” of delivering double digit LFL revenue and gross profit growth for 2020, adding that the company still had “a fighting chance” of achieving its three-year plan of doubling the firm organically at both top line and earnings (EBITDA).

He added that the company’s cash flow “remains strong” and it will continue to “conclude strategic mergers”.

“Having achieved brand awareness and brand trial over the first two years, our focus remains on broadening and deepening existing client relationships and conversion at scale”, Sorrell said, adding that the company was currently awaiting the results of two “major pitches” which had the potential to become ‘whopper’ clients, accounting for 5% of revenues.

The company also said that it was beginning to adopt a “hybrid model” to accommodate its employees now working from home, adding that it terminated a number of office leases that it said will allow its to integrate its operations “even faster” than originally thought.

S4 Capital shares rose 4.3% to 265p in early trading on Monday.

Quick facts: S4 Capital PLC

Price: 380.5 GBX

LSE:SFOR
Market: LSE
Market Cap: £2.02 billion
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