East Midlands profit warnings ‘reflect unpredictable economy’
Three profit warnings were issued in the East Midlands in the third quarter of 2017, compared to one in the previous quarter and three in the same quarter of last year.
According to EY’s latest Profit Warnings report, the increase in profit warnings recorded from July to September reflects the unpredictable economic climate.
East Midlands quoted companies have issued ten profit warnings so far in 2017, compared to 13 warnings in the first three quarters of 2016.
Across the UK, profit warnings have seen the biggest quarterly rise in almost six years. UK quoted companies issued 75 profit warnings in Q3 2017, significantly above the average levels of warnings (62) for a third quarter and up from the 45 issued in Q2. This high number of profit warnings exposes a growing divergence between those sectors of the UK economy more exposed to domestic pressures and those benefiting from growth in overseas markets. Pricing and cost pressures feature in 25% of all profit warnings so far in 2017, compared with 16% in 2016.
Dan Hurd, associate partner in EY’s restructuring team in the Midlands, said: “Summer brought mixed fortunes for East Midlands plcs, with the contrast between accelerating overseas markets and the slowing UK economy increasing. Many businesses besieged by pricing pressures before Brexit, are also now feeling the brunt of rising domestic uncertainty and rising costs.
“The rise of profit warnings we’re seeing in the East Midlands reflects the struggle of some companies caught on the wrong side of economic and digital trends to break free. Companies with a winning formula will continue to thrive, but that formula keeps changing and it’s going to get tougher to keep up.”
