By Nithyashree R B and Ankita Bora
(Reuters) – British advertising groups S4 Capital and M&C Saatchi downgraded their annual profit and revenue outlooks on Monday, as challenges across the advertising sector led by weaker client spending and contract delays are hurting revenues.
M&C Saatchi was hit by the longest government shutdown in U.S. history that stalled a major business during the October-December quarter, while S4 Capital cut its annual revenue forecast for the fourth time and warned on its full-year profit.
Shares in S4 Capital and M&C Saatchi fell as much as 11.3% and 18.3%, respectively, by 0940 GMT.
Advertising budgets have tightened as companies prioritise investments such as artificial intelligence while navigating political and economic uncertainty.
Both firms are cutting costs and streamlining operations to offset pressures that Peel Hunt analysts expect to persist, even if temporary challenges ease.
S4, founded by Martin Sorrell after leaving WPP in 2018, now expects 2025 like-for-like net revenue to fall just under 10%, with annual operational core earnings of about 75 million pounds ($98.26 million). Analysts had expected a profit of 81.6 million pounds.
S4 earns almost half its revenue from technology clients, including General Motors, Amazon and T-Mobile.
M&C’s Issues division, which handles climate, health, defence and human rights communications, relies heavily on U.S. government contracts and accounted for about a quarter of last year’s like-for-like sales. The company said it does not expect to recover lost revenue this year but sees a rebound ahead.
It now expects overall like-for-like net revenue decline of around 7% for 2025, more than the mid‑single digit percentage decline forecast earlier.
M&C’s like-for-like operating profit is now projected between 26 million pounds and 28 million pounds, lower than last year.
(Reporting by Nithyashree R B and Ankita Bora in Bengaluru; Writing by Pushkala Aripaka; Editing by Rashmi Aich and Louise Heavens)
