WPP Share News (WPP)

(Sharecast News) - Martin Sorrell's S4 Capital has nudged into the black for the first time, despite the impact of Covid-19, the advertising firm said on Wednesday.
The London-listed company, which was founded two years ago following Sorrell's acrimonious departure from WPP, reported billings of £260.4m in the six months to 30 June, up 12.7% on a like-for-like basis. Group revenue rose 6.9% to £141.3m on the same basis, boosted by new assignments from Paypal, Twitch and the LA 2028 Olympics, among others.

Pre-tax profits were £118,000, compared to pre-tax losses of £8.49m a year previously.

S4 Capital said the second half had started "strongly inline" with revised quarterly forecasts, with July gross profit ahead 18.2%.

"We believe that the second quarter of 2020 represents the low point - in our case, in April 2020 - with significant sequential improvements in the third and fourth quarters, followed by a full-throated recovery in 2021, driven by a distributed vaccine or vaccines by the second quarter of 2021.

"The company's prospects for 2021 also look stronger given the organic growth rate, increasingly client conversion at scale, significant merger activity and the likely post-Covid-19 economy recovery from a relatively low level of Covid-19 economic growth."

Since setting up S4 Capital in April 2018, the former WPP chief executive has overseen the acquisition of more than a dozen advertising agencies.

Sorrell said: "The tragedy of Covid-19 has only accelerated the speed of digital transformation and disruption at consumer, media and enterprise levels. These results confirm that S4 Capital is currently in a growth sweet spot."

Malcom Morgan, analyst at Peel Hunt, said: "S4 Capital's interims demonstrate that the company's business rationale is allowing it to prosper as the pandemic drives change in client needs. The emphasis on digital and first-party data, delivered by a unified structure and supported acquisition, is on point."

As at 1100 BST, shares in S4 Capital were ahead nearly 3% at 369.49p