East Midlands profit warnings at highest Q1 level since recession
A total of seven profit warnings have been issued in the East Midlands during the first quarter of 2016 – the highest Q1 level since the global recession hit in 2008 – according to EY’s latest Profit Warnings report.
The seven warnings issued in the East Midlands were up from three in the same quarter of 2015 and three in the previous quarter – already making up half of the total number of profit warnings issued in 2015 (14).
As a comparison, the level of warnings in the UK was also higher than expected, especially given the substantial downgrade in profit expectations at the end of 2015. UK quoted companies issued 76 profit warnings in the first quarter of 2016 – down from 77 in the same quarter of 2015 and 24 fewer warnings than the previous quarter – but in the twelve months to the end of Q1 2016, 17.2% of UK companies issued profit warnings compared with 16.5% at the same point in 2015.
Tom Lukic, EY’s restructuring partner in the Midlands, said: “These results show a relatively high proportion of companies warning in the East Midlands, making it a volatile start to 2016 for our local economy.
“East Midlands companies are clearly still coming to terms with the intense competition that comes as a result of overcapacity and disruption across many sectors. Weak oil prices once again featured highly, but that is not the only factor denting expectations.”
In the East Midlands, the FTSE and AIM sectors leading profit warnings in Q1 2016 were construction & materials (1), general retailers (3), media (1), pharmaceuticals & biotechnology (1) and leisure goods (1).
In the UK, the FTSE sectors with the highest percentage of companies warning in Q1 2016 are: Oil Equipment, Services & Distribution (50%), Mobile Telecommunications (50%) and Electronic & Electrical Equipment (48%).
