S4 Capital sales slump as ‘unsettling’ US tariff talks weigh on marketing spend

S4 Capital has reported lower sales and widening losses as it flagged “unsettling” US tariff talks and economic worries were weighing on marketing spending.

Shares in S4, which was founded by advertising mogul Sir Martin Sorrell, were down by around 8% on Monday morning following the update.

The company has been cutting costs and trimming its workforce as it has consistently warned over economic challenges affecting business.

It reported revenues of £360.4 million for the six months to the end of June 30 – down nearly 15% on the same period a year ago.

Pre-tax losses widened to £25.1 million for the half year, from £17.1 million the prior year.

Meanwhile, the number of staff employed by the group – which it calls “monks” due to its operating brand – was cut to around 6,900 by the end of June, down 9% compared with 2024.

S4 said its sales have been declining because its customers were more cautious to spend in the face of more unpredictable economic conditions.

Uncertainty about the impact of US tariffs has particularly weighed on confidence.

It also flagged less activity from some of its larger technology clients, who account for almost half of its revenues, including the reduction of one key client which it did not name.

Tech firms are increasingly prioritising spending on artificial intelligence (AI) capabilities, rather than marketing, it said.

S4 counts the likes of Samsung, Amazon, General Motors and T-Mobile among its current client list, with new business contracts set to boost sales over the second half of the year.

It has been leaning further into its AI offering with some of its customers paying for projects to experiment with the technology.

Executive chairman Sir Martin said: “Market conditions in the first half of 2025 reflect the continuing impact of, to say the least, volatile global macroeconomic conditions along with the unsettling effect of tariff negotiations.

“Assessing the impact of US-imposed tariffs has been added to the three key risks around US/China relations, Russia/Ukraine and Iran/Middle-East.

“Clients, therefore, are likely to remain cautious.”

However, he added that once tariff levels had been negotiated and the impact of new rates assessed, clients were likely to become more selective about which countries and regions they operate in and focus on technologies to make them more efficient.

“This may be the time when AI-adoption accelerates at scale,” he said.