Digital marketing group S4 Capital has reportedly cut 500 jobs as a result of concerns about a recession that has seen clients decrease their spending.
The company’s number of employees was reduced from 9,041 to 8,550 at the end of June this year compared to that of last year, as reported by The Guardian.
Following news of an expected decrease in revenue and narrower profit margins, shares in the company fell by 30% before closing at a 21% decrease, added the report.
Arduous macroeconomic conditions and fears of a recession particularly affected larger projects as clients are taking caution to commit and extend sales cycles, according to Martin Sorrell, S4's founder and executive chairman.
In fact, S4 Capital’s content practice saw profits drop by more than 70% like-for-like in the first half as compared to 2022. The group also said that given the current market outlook with inflationary staff costs and higher IT costs, the firm expects more job cuts to come.
S4 Capital also expects total group review to fall by 1% in contrast to its forecasted 2.5% growth and has also lowered profit margins to 12% from 14.5%.
Despite a fall in expected group revenue job cuts, the firm remains optimistic about the second half of the year from a simulation of increased seasonal activities of clients and its artificial intelligence initiatives in development with clients, added Sorrell.
The firm also remains confident in its talent, business model, strategy and scaled client relationships in the long term. It will place renewed emphasis on deploying free cash flow to dividends and share buybacks, according to Sorrell.
As the firm looks to restructure amid recessionary concerns, Michel de Rijk recently stepped down from his role as chief executive officer APAC at Media.Monks and S4 Capital Group after four and a half years as he looks to focus on "different priorities in life", according to a LinkedIn post by the marketing veteran at the time.
In his post, de Rijk noted that his time at Media.Monks and S4 Capital Group was a "journey" in what was probably the "most difficult circumstances I could ever imagine".
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