S4 Capital has reported a significantly narrowed operating loss for the first half of 2023, mainly due to lower combination-related expenses. However, the company has lowered its full-year expectations following slow summer trading.
Operating Loss and Revenue
The company announced an operating loss of £6.4 million ($7.9 million) for the first half of the year, compared to a loss of £75.4 million in the previous year. The slower top-line growth impacted the profitability of the company, falling below its budgets. S4 Capital emphasized its commitment to disciplined cost management.
Revenue increased to £517.1 million from £446.4 million, with net revenue rising by 19% on a reported basis to £445.5 million. However, on a like-for-like basis, growth was only 5.1%. The company attributed this to challenging macroeconomic conditions and clients’ caution due to recession fears.
Revised Expectations and Margins
Due to slower-than-expected business over the summer months, S4 Capital has revised its full-year expectations. It now anticipates a decline in like-for-like net revenue compared to the previous year, as opposed to the earlier guidance of net revenue growth between 2% and 4%.
Additionally, the company has reduced its target for the operational earnings before interest, taxes, depreciation, and amortization margin. The margin is now expected to be between 12% and 13.5%, down from the previous range of 14.5% to 15.5%.
Dividend Consideration
S4 Capital’s board will consider a dividend of at least 1 pence per share for the full year. The company expressed confidence in its strategy and expects to be cash generative in 2024 without any significant combination payments.
