East Midlands profit warnings at 20-year high
The number of profit warnings issued by East Midlands listed businesses in the first half of 2020 (H1 2020) increased by 140%, with 79% citing the impact of the COVID-19 pandemic, according to EY’s latest Profit Warnings report.
EY recorded 24 profit warnings in the region in H1 2020 (Q1 & Q2) – its highest in 20-years. In the first quarter of 2020, quoted companies in the East Midlands issued 18 warnings, followed by six in Q2 – a 67% reduction.
Profit warnings were spread across a wide range of sectors in the region in H1 2020. However, FTSE Retailers in the East Midlands reported the highest number of profit warnings (13), accounting for 54% of all profit warnings in the region in the first half of the year.
Dan Hurd, partner in the strategy and transactions team at EY in the Midlands, comments: “Unsurprisingly, the most immediate and significant impact of COVID-19 has been acutely felt by companies whose existing structural challenges have been exacerbated by the pandemic.
“Many businesses that were essentially sound before the virus struck, have been forced to reassess their expectations and business plans too. It’s vital that businesses in the East Midlands don’t underestimate the depth and extent of both the immediate and long-term challenges ahead.
“With retailers recording the highest number of profit warnings in the region this year, those businesses that have been able to make the most of their online operations and adapt quickly to continue to meet the needs of their customers, are likely to have fared best. Despite the high street beginning to open-up again, there’s a risk that we may not see a return to the same pre-COVID levels of consumer activity for quite some time.
“It is still a highly uncertain time for businesses, who are adjusting to new ways of working and changing levels of demand. With potential cliff-edges, in government support, and further twists and turns likely in Brexit negotiations, this uncertainty may continue in the coming months.”
