Sorrell is reeling from ANOTHER profit warning as he loses £430m from his stake in S4 Capital

Sir Martin Sorrell was forced to wipe out another £11 million of his fortune yesterday as shares in his advertising company plunged after it issued a second profit warning.

Shares in S4 Capital fell 21.7 per cent, or 20.7p, to 74.8p, ​​taking Sorrell’s losses over the last two years to over £430m.

The latest slump came as the company warned that sales and profits would be lower than expected this year as companies cut marketing spending amid fears of a recession.

Sorrell owns a more than 9 percent stake in S4 Capital, a digital marketing company he founded in 2018 after leaving advertising giant WPP amid allegations of personal misconduct.

The British businessman, who took control of WPP in 1985, denies the allegations.

Rollercoaster ride: Sir Martin Sorrell founded digital marketing company S4 Capital after leaving WPP

Yesterday’s share price fall reduced the value of Sorrell’s shareholding by £11m and now stands at £41m.

Its shares were worth £472m in September 2021, when the price peaked at 870p, meaning it has lost £431m over the past two years.

The share price decline was triggered by S4 Capital lowering its 2023 profit margin forecast to 12 to 13.5 percent from 14.5 percent to 15.5 percent.

The company said revenue is expected to be lower than last year as customers spent less on advertising and marketing campaigns.

S4 Capital blamed the slump on “slower-than-expected trading in the summer months” as potential customers reduced their advertising budgets due to economic uncertainty.

It is the second time in two months that the company has downgraded its expectations after cutting its sales growth and profit forecast in July, attributing the decline to lower customer spending in the technology sector.

The company also announced yesterday that it has cut at least 450 jobs and plans to cut more jobs in the second half of the year.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Sir Martin Sorrell’s incredible success at WPP was always going to be hard to follow.”

“The five years since he founded rival S4 Capital have been something of a rollercoaster ride.”

“While advertising spending has proven relatively resilient, the earnings statement suggests that some headwinds are forming and the market has not taken this particularly kindly.”

He added that net debt, which stood at £109m in the last six months to June 30, “is starting to be a bit of a concern as financial performance is not keeping up with payouts for previous acquisitions.” “.

“Investors likely want to see the core business come to fruition before looking for further consolidation opportunities,” Nathan said.

Sorrell said there was a “mixed picture” across customers and geographies, with three factors influencing the market.

“First, technology customers have been more cautious in their spending,” he said. “Second, packaged goods companies have increased their prices in line with or above inflation and set their advertising budgets based on net revenue.

“Thirdly, regional and local customers were quite cautious. That’s the big difference we saw between the first half of last year and this year.”