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Number of profit warnings among UK-listed firms hits two-year high

Published 04/11/2024, 09:05
Updated 04/11/2024, 09:10
© Reuters Number of profit warnings among UK-listed firms hits two-year high

Proactive Investors - Profit warnings among UK-listed companies surged to a two-year high over the third quarter, EY-Parthenon has reported.

Some 84 companies warned on profits between July and September, marking an 11% increase year on year and the highest total since the third quarter of 2022.

This meant 19.2% of UK-listed firms had issued profit warnings over the last year, reflecting the largest percentage since the pandemic and 2001 before that.

“Uncertainty has been a persistent feature of the business environment for several years now, but, unusually, this latest surge in warnings wasn’t preceded by a sudden economic downturn or one-off event,” EY-Parthenon Partner Jo Robinson commented.

Heightened geopolitical tensions and intensifying uncertainty ahead of last week’s Autumn Budget were likely to have weighed, Robinson added.

Some 38% of warnings over the third quarter were triggered by contract and order cancellations, while falling sales prompted a third, according to EY-Parthenon.

Companies across the industrial support services sector issued the highest number of profit warnings, accounting for 10, followed by technology hardware and equipment firms.

“Time will tell whether this rise in profit warnings is a temporary spike or indicative of a longer-term trend,” Robinson added.

“But, against a volatile macroeconomic and policy backdrop, coupled with profound changes in technology and consumer behaviour, abrupt adjustments to earnings expectations appear increasingly likely.”

Read more on Proactive Investors UK

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