Will Green
Mar 31, 2023

S4 sees growth slow in 2023 after losing key Mondelez contract

Martin Sorrell says the company continues to have a 'significant relationship' with Mondelez.

Martin Sorrell said Mondelez contract loss had US$21 million impact
Martin Sorrell said Mondelez contract loss had US$21 million impact

S4 Capital has reported a 46% increase in billings during 2022 as it secured 10 “whopper” relationships.

Preliminary results for 2022 showed the company achieved billings of $2.23 billion in 2022, compared with $1.61 billion in 2021.

Revenues hit $1.33 bilion in 2022, up on $850.6 million in 2021, on the back of 10 “whopper” relationships, defined as those with revenues of more than $20 million a year, compared with six in 2021 and two in 2020.

Operating profits were $153.9 million, 23% up on $125.1 million in 2021, but S4 Capital still posted an operating loss of $167.6 million due to “primarily combination-related expense, being payments linked to continued employment and the associated expenses”.

However, in 2023, growth has slowed and the share price slipped this morning.

Last year also brought the loss of a “whopper” contract with Mondelez, as the confectionery and snack maker moved part of its global content production remit to WPP and Publicis Groupe.

Martin Sorrell, executive chairman of S4 Capital, told an earnings call the move had a $21 million impact.

“On Mondelez, it’s very difficult to comment and neither would we wish to on a specific client,” he said. 

“But I would just sort of move away from the specifics and just say that, when you are involved in projects of of those kind, they involve organisational changes on both sides, on both the client and the agency side, which are sometimes difficult to do, and I think in many cases, you end up with a situation where it’s important that both sides can see a way through, and we did say in the release, we mutually agreed on ceasing that contract.”

He added: “It’s only part of the Mondelez relationship. We continue to have a significant relationship with them elsewhere.”

In a statement, Sorrell said: “The company continued to outperform the growth of the digital advertising and transformation markets in 2022, crossing $1.24 billion revenue for the first time and to broaden and deepen relationships with its largest clients, continuing conversion at scale. 

“The actions taken by our management and the positive response by our people to the first half challenge of balancing growth in net revenue with growth in costs, have delivered a much improved second half performance. This really reflects what the company is capable of achieving. 

“We have momentum going into 2023 and are cautiously optimistic, despite the slowdown of growth in our major addressable markets. We expect to make continued progress, stimulated, in particular, by the early and rapid implementation of revolutionary new technologies such as AI.”

Campaign UK

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