West Midlands bucks national trend for Q1 profit warnings
THE West Midlands only saw one profit warning issued in the first quarter of 2015, two less than the same period of 2014 and four less than the previous quarter.
EY has said the figures suggest the economic recovery in the region is continuing to gather momentum – in contrast to elsewhere in the country.
According to EY’s latest Profit Warnings report, the UK saw an increase in profit warnings with 5.4% (77) of UK quoted companies issuing profit warnings in Q1 2015 – the highest first quarter percentage since 2009.
The figure is higher than expected, especially given the much improved economic outlook and the significant adjustment to forecasts at the end of 2014, when profit warnings hit a six-year high.
One of the main triggers then was considered the rapid fall in oil price at the end of last year, which contributed to 16 UK profit warnings.
However, EY said it was more than just falling oil prices that contributed to the year-on-year rise – increasing competition and pressure on prices contributed to 22% of UK profit warnings in Q1 2015.
The FTSE sectors leading UK profit warnings in Q1 2015 were Oil & Gas Producers (8), Support Services (8), Software & Computer Services (7) and General Retailers (6). The single profit warning from the West Midlands came from the Household Goods sector.
Tom Lukic, EY’s restructuring partner in the Midlands, said: “The low number of profit warnings in the West Midlands is a sign of an improving local economy and is consistent with the growth we’re seeing across the region.
“The positive outlook in the West Midlands appears contrary to the overall national trend, which has seen higher than expected profit warnings across the UK and demonstrates that, whilst there is increasing confidence, it’s still a tough environment in which to plan and forecast.
“The recovery hasn’t increased predictability and companies will need to work hard to create a distinctive and adaptable business that can translate an improving outlook into stronger and sustainable earnings growth. There are clear advantages for businesses that can take the initiative and demonstrate that they have market understanding and the business resilience necessary to match this unpredictable recovery.”
