By Joe Hoppe
S4 Capital reported a significantly narrowed operating loss primarily due to lower combination related expenses, but lowered its full-year expectations after slow summer trading.
The company on Monday posted an operating loss of 6.4 million pounds ($7.9 million) for the first half of 2023, compared with a loss of GBP75.4 million a year earlier. First-half profitability reflects slower top line growth and was below the company’s budgets, and it said it is maintaining a disciplined cost-management approach.
Revenue increased to GBP517.1 million from GBP446.4 million, the company said, adding that net revenue rose 19% on a reported basis to GBP445.5 million. On a like-for-like basis, however, growth was 5.1%, reflecting challenging macroeconomic conditions and clients’ caution due to fears of recession.
S4 Capital said following slower-than-expected business over the summer months, it has revised its full-year expectations, and now sees like-for-like net revenue down on-year, from prior guidance of net revenue growth in the range of 2%-4%.
It also cut its target for its operational earnings before interest, taxes, depreciation and amortization margin to 12%-13.5% from 14.5%-15.5% previously.
The company said the board will consider a dividend of at least 1 pence a share for the full-year. It said this reflects confidence in its strategy and the fact that it expects to be cash generative in 2024 with no material combination payments.
Write to Joe Hoppe at joseph.hoppe@wsj.com
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