(Reuters) -Martin Sorrell's advertising group S4 Capital declared its first ever dividend on Monday, sending its shares up more than 10%, even as it warned that clients would remain cautious in the near term amid increasing macroeconomic uncertainty.

Shares in the company, which have lost nearly 18% over the past year, rose as much as 13% to 37.28 pence as S4 proposed a final dividend of 1 pence per share for 2024 - a first since its inception in 2018 - which Jefferies analysts said was a sign of confidence in its prospects.

The company also reiterated its 2025 outlook, targeting annual net revenue and operational core profit to be broadly similar to 2024, as it continued to actively check costs, including headcount and discretionary expenses.

Its operational core profit margin grew to 11.6% for the year ended December 31, up 90 basis points from last year, despite a 5% fall in adjusted operating profit to 78.3 million pounds ($101.4 million).

S4 Capital said growth challenges from one key client would continue in the first half of 2025, but it expects "improved performance" in the second half.

Advertising is typically one of the first victims of companies cutting costs in difficult times, and the warning comes as global economies grapple with growth concerns and potential vagaries from the U.S.-driven tariff war. 

"Uncertain macroeconomic conditions and client caution have ratcheted up recently, however, our prominent positioning in AI is driving new business opportunities," S4 Capital said in a statement.

The company said its technology clients continued to focus spending on AI-related capital expenditure, rather than expenses such as marketing.

Last month, S4 Capital's rival WPP also said it expects its revenue and profit to be flat at best this year because of a weak Chinese market and uncertainty in the United States.

($1 = 0.7726 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Mrigank Dhaniwala and Janane Venkatraman and David Evans)