LONDON BRIEFING: Sorrell says digital marketing to beat soft economy – Morningstar

(Alliance News) – Advertising firm S4 Capital on Monday said its revenue jumped in the first quarter and was ahead of its guidance to the market.

“Momentum has been reinforced by two further ‘whopper’ additions making a total of eight against the target of 20, one through pitch and one through a combination, both of which will be fully effective in 2023,” S4 explained.

Revenue in the first quarter of 2022 was up 70% on the year before at GBP206.8 million and up 41% on a like-for-like and pro-forma basis. Gross profit rose 65% to GBP171.1 million and by 35% on a like-for-like and pro-forma basis.

The Martin Sorrell-led firm added: “This represents an excellent start to achieving the company’s 2022-24 three-year plan of doubling its size on a like-for-like basis and of also achieving the previous similarly targeted 2020-22 and 2021-23 three-year plans, which both also called for a doubling. The company achieved its first three-year plan for 2019-21.”

For 2022, S4 maintained its like-for-like gross profit growth guidance of 25%.

“The chickens may well come home to roost in 2023, as interest rates rise further this year to counter the inflation surge,” Executive Chair Sorrell said. “But, digital marketing expenditure remains robust, even in a recession, as, for example, our results in 2020 demonstrated, given its secular growth trend.”

S4 Capital shares were up 0.6% early Monday, though the stock remains down 50% in the past 12 months.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.4% at 7,615.03

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Hang Seng: up 2.0% at 21,115.58

Nikkei 225: closed up 2.2% at 27,369.43

S&P/ASX 200: closed up 1.5% at 7,286.60

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DJIA: closed up 575.77 points, or 1.8%, at 33,212.96

S&P 500: closed up 100.40 points, or 2.5%, at 4,158.24

Nasdaq Composite: closed up 390.48 points, or 3.3%, at 12,131.13

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EUR: up at USD1.0762 (USD1.0705)

GBP: up at USD1.2642 (USD1.2612)

USD: down at JPY127.08 (JPY127.17)

GOLD: up at USD1,861.80 per ounce (USD1,852.40)

OIL (Brent): up at USD119.91 a barrel (USD117.73)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Monday’s key economic events still to come

US Memorial Day holiday. Financial markets closed.

1100 CEST EU business & consumer surveys

1400 CEST Germany consumer price index

1100 BST Ireland retail sales

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EU leaders are to meet in Brussels on Monday for a two-day extraordinary summit to discuss their support for Ukraine as well as their long-term response to Russia’s invasion. The meeting comes amid continued division over an embargo on Russian oil after a compromise proposed by the European Commission to exempt oil imported by pipeline failed to receive backing by all EU ambassadors at talks on Sunday. A ban on Russian coal imports was approved earlier this year. The commission then proposed at the beginning of March to end imports of Russian crude oil in six months. But Budapest has steadfastly blocked the measure, leading to the ongoing stand-off. Hungary’s fierce opposition to a full embargo in favour of imports of cheaper Russian oil has created discord among member states. Consultations between diplomats and EU officials on the sanctions are expected to continue on Monday morning in an attempt to resolve differences before leaders arrive.

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Talks between Chinese Foreign Minister Wang Yi and 10 Pacific Island nations failed to reach an agreement on a wide-ranging security deal Monday, after sharp warnings the proposal would push the region into “Beijing’s orbit”. A virtual summit of leaders and foreign ministers was expected to discuss proposals to radically increase China’s involvement in the security, economy and politics of the South Pacific. But the effort appeared to have fallen short after some regional leaders voiced deep concern. Wang is in the Fijian capital Suva as part of a 10-day diplomatic blitz, as Beijing jostles with Washington and its allies over influence in the strategically vital Pacific. Ahead of his visit, China proposed a pact that would see Beijing train Pacific Island police, become involved in cybersecurity, expand political ties, conduct sensitive marine mapping and gain greater access to natural resources on land and in the water. As an enticement, Beijing offered millions of dollars in financial assistance, the prospect of a China-Pacific Islands free trade agreement and access to China’s vast market of 1.4 billion people.

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BROKER RATING CHANGES

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RBC cuts DCC to ‘sector perform’ (outperform) – price target 5,800 (7,500) pence

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Numis cuts Flutter to ‘reduce’ (hold) – price target 8,100 (12,900) pence

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SocGen raises Rolls-Royce to ‘hold’ (sell) – price target 90 (97) pence

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COMPANIES – FTSE 250

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Housebuilder Countryside Partnerships has turned away a second approach in two months from San Francisco-based investor Inclusive Capital Partners. In-Cap said the offer – at 295 pence per share – represents a “compelling proposition for Countryside shareholders”. “The In-Cap team believes that Countryside shareholders deserve the opportunity to decide on the merits of any offer, and that if an approach is made in good faith, the Countryside board should act in the interests of its shareholders by engaging with the potential offeror and not deny its shareholders this opportunity,” it said. In-Cap currently owns about 45.8 million Countryside shares, a 9.2% stake.

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Engineering firm IMI agreed to buy Bahr Modultechnik for an enterprise value of EUR98 million. Birmingham-based IMI said Luhden, Germany-based Bahr will become part of its Industrial Automation business within IMI Precision Engineering. Bahr manufactures modular electric linear motion systems. The acquisition is expected to take close by mid-June. “The proposed acquisition of Bahr is aligned to IMI’s strategy and its purpose of ‘breakthrough engineering for a better world’. The addition of Bahr will enable IMI Precision to deliver a power agnostic offering of pneumatic and electric linear motion systems,” IMI said.

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Centrica said it has completed the USD1.1 billion sale of Spirit Energy’s Norwegian assets to Sval Energi and of its interests in the Statfjord field to Equinor. The British Gas-owner said the final headline consideration may rise to USD1.2 billion, depending on commodity prices. It also noted that all decommissioning liabilities, estimated at GBP800 million, transfers to the buyers. Spirit Energy now will focus on delivery of its gas production for the UK.

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COMPANIES – SMALL CAP

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Estate agent Foxtons has poached Guy Gittins, the chief executive officer of London rival Chestertons, to be its new CEO, starting in September. Gittins replaces Nic Budden, who has stepped down after running Foxtons since 2014. Non-Executive Director Peter Rollings, who formerly was managing director of Foxtons, will act as interim CEO until Gittins arrives. Foxtons also said it has made a good start to its financial year, with trading in line with board expectations.

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COMPANIES – GLOBAL

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Toyota Motor said that both sales and production in April fell below the previous year’s level as a result of Covid-19 and parts supply shortages arising from increased semiconductor demand. The Japanese carmaker added that it has revised its production plans to be “more reasonably in line with recent realities”. Toyota calls the period from April to June an “intentional pause”. It said conditions remain unclear regarding the spread of Covid-19 and parts supplies. Total worldwide sales in April stood at 835,657, down 10% against the previous year. Worldwide production totalled 826,287 in April, down 7.7%.

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Friday’s shareholder meetings

Adriatic Metals PLC – AGM

Clarify Pharma PLC – AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2022 Alliance News Limited. All Rights Reserved.

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