Listed firms buck profit warnings trend

NORTH West listed companies bucked a UK-wide trend of increasing profit warnings in 2014, as the number of alerts fell by 15%.

According to EY’s latest Profit Warnings report, there were just 17 warnings in the North West in 2014, down from 20 in the region in 2013 and 27 in 2012. However, the seven warnings recorded in the final quarter of 2014 represented the highest quarterly total since Q1 2013.

The North West’s performance last year came in stark contrast to that of the wider UK, where profit warnings hit a six-year high of 299 in 2014, with more FTSE 100 companies warning in 2014 than at the height of the credit crunch.

Tom Jack, restructuring partner at EY in the North West, said: “2014 was a good year for North West PLCs compared to the UK as a whole, highlighting the region’s relative success in adapting to the economic recovery. Firms in the North West are becoming increasingly adept at forecasting profit growth and have a strong grasp on working capital as they expand, which is an important factor in flourishing post-downturn.

“However, an improving macro outlook, which we saw during 2014, is no longer a guarantee of a smoother ride for UK plc. The jump in profit warnings in the final quarter of last year may reflect the political, policy and pricing uncertainties that hit confidence at the end of 2014, and perhaps gives us a taste of what’s to come in the first half of 2015.”

Nationally, it was not just the FTSE 100 that  encountered stormy waters.  Total profit warnings from FTSE 350 companies were just three shy of the record 90 issued during the recession in 2008.

Adverse exchange rates, in particular strong Sterling and weakening emerging market currencies, were cited by 17% of those companies warning in 2014, including 27% of warnings from the more internationally exposed FTSE 350 firms. Throughout 2014, 20% of warnings cited contract delays or cancellations, peaking at 27% in Q4 2014 as global uncertainties increased.

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