Region’s profit warnings fall to their lowest since 2010

PROFIT warnings by PLCs in Yorkshire and the North East fell in the first three months of 2015, according to EY’s latest Profit Warnings report; the lowest first quarter total since 2010.

Companies in the region issued six profit warnings in the first quarter of 2015 compared with nine in the same quarter of 2013, and 10 in 2014, the year in which warnings reached a three year high.

There were seven profit warnings in the region in the last quarter of 2014.

Hunter Kelly, restructuring partner at EY in Yorkshire and the North East, said: “These results for Yorkshire and the North East suggest that PLCs had a more stable start to this year than previous years.

“However, it’s still a tough environment in which to plan and forecast. The recovery hasn’t increased predictability for many factors, including currency movements or competitor pricing activity.

“Companies need to work hard to create a distinctive business that can translate an improving outlook into earnings growth. There are clear advantages for firms that can demonstrate market understanding and the business resilience necessary to match an unpredictable world.”

Across the UK, companies issued 77 profit warnings in the first quarter of the year, three more than in 2014, but 16 fewer than the previous quarter.

EY said that the level of UK warnings was “higher than expected, especially given the much improved economic outlook and the significant adjustment to forecasts at the end of 2014” – when UK warnings hit a six-year high.
Mr Kelly said: “We expect the number of UK profit warnings to fall, but not by as much as we’ve seen in previous economic cycles.

“Even in the absence of a major shock, there is still geopolitical uncertainty. Speculation over the timing of US tightening and diverging policies elsewhere will keep markets volatile.

“Companies must continue to build capital, market, operational and stakeholder resilience and to ensure they can cope with markets turning out to be different than expected.”

 

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