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Investing.com -- S4 Capital (LON:SFOR) stock climbed 6% on Thursday, despite the company reporting an accelerated decline in like-for-like net revenue in the first quarter of 2025.
The increase in share price appears to be a reaction to the company’s assurance that Operational EBITDA is trending in line with full-year management expectations.
The advertising and marketing services firm revealed that lfl net revenue fell by 11.4%, a greater decline than seen in the previous two quarters of 2024.
Marketing Services, which accounts for 91% of net revenue, saw a reported decrease of 8.6% year-on-year (YoY), while Technology Services experienced a more significant lfl drop of 36.9%.
Despite these declines, the closing net debt was reported at £144.8 million, down from £206 million in the first quarter of 2024, with a net debt to LTM proforma Operational EBITDA ratio of 1.7x.
The company’s trading commentary highlighted ongoing challenges in the macroeconomic environment, with significant volatility and uncertainty in global economic policy.
A key Technology Services client, first mentioned in the second quarter of 2024, continued to be a headwind, although its precise impact remains unquantified.
Management noted that Marketing Services faced tougher conditions than expected, while Technology Services traded in line with projections.
Importantly, the company has reaffirmed its guidance for net revenue and Operational EBITDA for the full year of 2025, expecting both to be "broadly similar to 2024" on a constant currency basis.
The firm anticipates lfl growth to improve in the second half of 2025, supported by easier comparisons, continued cost discipline, and the impact of new business wins, including a recent win with a major TMT client for their "Real Time Brands" proposition.
Jefferies analysts commented on the first quarter results, stating, "The 1Q25 deterioration in the lfl revenue decline is understandable given the worsening macroeconomic backdrop, a feature of the trading environment management calls out."
"Critically, Operational EBITDA, with the underpinning of firm cost discipline, is trading to management expectations."
S4 Capital also reiterated its medium-term target of 1.5x leverage and a long-term goal of EBITDA margins of around 20%.
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