Shares in Sir Martin Sorrell’s S4 Capital slumped 44 per cent on the London stock market late last week forcing the company to issue a warning on profits to shareholders.
Shares in S4 Capital slumped to 125.80 pence in London early Thursday, leaving the digital advertising company with a market capitalisation of around £700 million ($A1.2 billion).
However, it might not be all bad news for Sorrell and co, the company blaming increased staff and hiring costs for the share market plunge.
The company has since lowered its full-year guidance on earnings before interest, taxes, depreciation and amortisation to £120 million ($A208 million), short of current consensus estimates of £154 million ($A267 million) to £165 million ($A286 million).
An S4 spokesperson said in a statement: “Continued significant investment in hiring and consequent expansion of the company’s cost base, particularly in the content practice, have had a negative impact on first half EBITDA and EBITDA margin.
“With the pattern of profitability already significantly skewed to the second half of the year, and as previously signalled more than the usual two-thirds weighting, this means that the profitability required for the second half of the year to meet market expectations will be even greater,” it added.
In order to “better balance” growth in revenue, profits and costs the company had put in place a brake on hiring as part of “significant cost reduction measures”.
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