Listed firms see significant rise in profit warnings in 2018

A total of 37 profits warnings were issued in 2018 by listed companies in Yorkshire and North East, which marks a 32% increase on the previous year.

Ten of these profit warnings issued in the fourth quarter of 2018, according to EY’s latest Profit Warnings report.

This was up from eight profit warnings in the previous quarter and also an increase on the region’s performance in the final quarter of the 2017, which saw seven companies issue warnings.

Of the ten warnings made in Yorkshire and the North East, a number of companies that warned were from sectors that are associated with technology.

Hunter Kelly, EY’s head of restructuring for Yorkshire and the North East, said: “It is particularly significant that we have seen more ‘new’ companies warning in 2018. It demonstrates that there are more wide-reaching pressures and that the rising uncertainty on confidence and demand is having an impact.

“The average fall in share price indicates that investors, like many businesses, are positioning for the worst. Recent events have created further uncertainty and with no obvious end in sight for some of them there is no let-up in the factors that could derail a business plan.”

The weather and regulatory issues also played a major part as to why profit warnings spread in 2018. China’s slowdown also hit automotive and technology sales.

Kelly said: “A combination of a relentless margin squeeze, the increasing average cost of getting product in front of and to the consumer, the continuous need for reinvention and falling consumer confidence made 2018 an exceptionally tough year for the retail sector.

“To survive, retailers will need a strong understanding of their customers, the unique selling points of their offering to avoid the ever downward spiral of discounting to attract sales.”

In 2018, 50% of profit warnings cited weaker consumer confidence, up from 25% in 2017, which has spread profit warnings into previous growth areas, such as online.

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