Profit warnings for UK firms surge to highest since financial crisis

Economic volatility in 2019 has seen the number of profit warnings by UK-listed firms surge to its highest since the financial crisis.

New research has revealed that 235 profit warnings were issues by UK quoted companies in the nine months to September, the highest total since 2008.

Profit warnings jumped on the back of Brexit concerns, with almost a quarter of firms issuing warnings citing Brexit as a key factor, according to new data from accounting firm EY.

EY’s latest profit warnings report highlighted an acceleration in the number of warnings throughout the year, with 77 profit warnings recorded in the past three months.

This represents a rise from 69 profit warnings in the second quarter, as more than a third of warnings cited volatility in the economy.

Contract delays and cancellations were also blamed for 30% of warnings.

Meanwhile, 22% of profit warnings in the most recent quarter stated that Brexit was a factor ahead of the October 31 deadline.

Alan Hudson, EY’s head of restructuring for UK & Ireland, said: “This summer, in addition to domestic concerns, UK businesses have felt the growing impact of escalating political and trade tensions in the global economy.

“The negative effect of protracted and widespread uncertainty is evident, with warnings becoming more widespread across all FTSE sectors.

“Although the economy is in better shape now than it was in 2008, there are clear parallels in terms of sheer unpredictability.”

In the past 12 months, almost 18% of UK-listed firms have issued a profit warning, the highest proportion for almost 15 years.

A significant number of profit warnings this year came in the retail sector as the high street continues to struggle, EY said.

The number of profit warnings for FTSE retail firms hit an eight year, the finance firm said, representing 28 different downbeat statements.

Lisa Ashe, restructuring partner at EY UK, said: “The odds are stacked against some retailers as they go into the all-important final quarter of the year.

“Sales have slowed, in-store and online, throughout 2019 and dipped further in September.”

Read Full Story

FROM OUR PARTNERS