NW bucks national trend with fewer profit warnings

THE number of profit warnings issued by North West public companies fell by 36% in the first six months of 2014, according to figures from EY.

The accountancy group said there were nine warnings in the North West – the lowest first half total since 2010 – compared with 14 in the same period last year.

There were three profit warnings in the support services and two in the household goods industries in the region, while businesses in four other FTSE sectors also issued warnings.

In contrast there were 137 warnings nationally – the highest first half total since 2011.

Tom Jack, Restructuring Partner at EY in the North West, said: “This stellar first half performance highlights North West Plcs’ success in adapting to life after the downturn and re-focusing on growth in the recovery. Many businesses have become more operationally agile and focused on working capital to respond to new expansion prospects, and have been able accurately forecast profit growth.

“Despite the recovery gathering momentum, challenges remain with exchange rate changes cited as one of the main reasons for North West profit warnings during the period. While recent history shows that UK exports are relatively insensitive to currency effects, the pound’s leap to multi-year highs has caught out some companies who translate foreign earnings back into pounds.

“Fresh challenges in the second half of this year, including the allocation of capital, look set to test earnings forecasts.  Low growth in international markets and low inflation will also be hurdles to overcome, so the operational and financial fitness that North West firms have displayed so far this year will be vital to ensure they make the most of growth opportunities during the rest of 2014.”