S4 Capital, the advertising firm led by Sir Martin Sorrell, has revised its revenue expectations for the year, citing decreased confidence among major global brands due to President Trump’s extensive tariff strategies.

The company now anticipates a revenue decline within the “low single digits,” deviating from its previous expectation of performance being “broadly similar” to last year, as stated in a trading update ahead of its annual meeting.

Sorrell, who serves as the executive chairman, attributed this shift to “challenging global macroeconomic conditions, persistent high interest rates, and certain underperformance” compared to the broader market.

According to Sorrell, significant brands have adopted a more cautious spending strategy during the initial five months of the year due to “volatile” economic climates. He reiterated earlier comments made in March regarding the adverse effects of Trump’s tariffs on the advertising sector.

Clients from the technology sector, which represents approximately 50% of the company’s revenue, have been focusing more on operational expenses instead of capital expenditures, Sorrell, who is 80, indicated.

The technology services division of S4, contributing around 15% to its net revenue, has faced challenges following the departure of a major client.

Continuing uncertainty means that clients are likely to remain cautious, opting to be “much more selective about which markets to operate in” to identify growth opportunities. Sorrell noted a focus on integrating technologies, including AI, to enhance efficiency in this slower growth, higher inflation, and elevated interest rate environment.

The company reaffirmed its guidance for flat operational adjusted earnings—its preferred measure of profit—while anticipating improved trading conditions in the latter half of the year, aided by new business partnerships with Amazon, General Motors, and T-Mobile.

Last year’s operational earnings stood at £87.8 million, falling from £93.7 million in 2023, alongside an 11% decrease in underlying net revenue to £755 million.

S4 Capital is committed to cost management, with its average monthly net debt reduced to £144 million at the end of May, down from £199 million a year prior. The company projects further reductions in net debt to between £100 million and £140 million by year-end, aiming for a leverage ratio of around 1.5 times adjusted earnings.

Cost-cutting efforts have included workforce reductions, with employee numbers decreased to roughly 7,000 from 7,600 in the previous year. The company states it will maintain a “disciplined approach to our cost base and pursue margin enhancement going forward.”

S4 Capital, founded by Sorrell in 2018 following his contentious exit from WPP—an advertising giant he established in 1985 amid misconduct allegations—focuses on the digital advertising sector. It has expanded through the acquisition of agencies Monks and MightyHive, now unified as MediaMonks, and operates in 33 countries.

Over the last year, the company’s shares have decreased by 50%, yet they rose by ½p, or 1.9%, to 26½p, as analysts had anticipated a revenue decline in their forecasts.

The firm will propose its first final dividend of 1p per share, amounting to a total return of £6.1 million, pending approval by shareholders at the upcoming AGM.