Profit warnings in the East Midlands remain low
Quoted companies in the East Midlands issued three profit warnings in the third quarter of 2016, the same as in the previous quarter and an improvement on the seven warnings issued in the first quarter of 2016.
This contrasts strongly with the UK picture where the number of profit warnings jumped to 68 – two more than the previous quarter, but 11 fewer than the same period in 2015 – according to EY’s latest Profit Warnings report.
The worst hit region was London and the South East where companies issued 38 warnings in the third quarter of 2016 – more than half the total number of warnings issued across the UK.
Brexit led the reasons for UK profit warnings this quarter, with 20 warnings citing the fallout from the vote. Nevertheless, the initial Brexit impact has been mixed and the negative effects have been focused on sectors most exposed to business uncertainty and the weaker pound. The FTSE sectors with the most Brexit-related warnings so far in 2016 are: Support Services (6), Travel & Leisure (4) and Real Estate Investment & Services (4).
Most companies also blamed other factors, including falling sales and difficult conditions in their own sector. Overall, the FTSE sectors leading profit warnings in Q3 2016 were: Support Services (12), General Retailers (6), Travel & Leisure (5), Household Goods (5) and Industrial Engineering (5). The three profit warnings in the East Midlands came from the Industrial Engineering, General Retailers and Software & Computer Services sectors.
Tom Lukic, EY’s restructuring partner in the Midlands said: “Companies in the East Midlands are contending with a daunting level of uncertainty. The fallout from Brexit has impacted profit warnings nationally, but the region continues to weather the storm. For some companies it has been business as usual and for some, the falling pound has been a help rather than a hindrance.
“Sluggish, disrupted and competitive markets don’t provide companies with the luxury of standing still – whatever the outlook. Companies will need to remain agile in their operations and capital structures to ensure they are resilient in the face of new challenges – and to grasp opportunities.”
