Profit warnings low, but trouble ahead says E&Y

TWO profit warnings were issued by quoted companies in the North West during the second quarter of 2010 – an all time low for the region in the past eight years, according to a report by Ernst & Young.

Five profit warnings were issued in the first half of 2010, compared with 16 in the same period in 2009 – down 69%.

Ernst & Young said the number of warnings has been low since the last quarter of 2009 when there were four.

The region has reflected the national trend. Overall there were 45 profit warnings in the second quarter of 2010, a near seven-year low.

Contract amendments or cancellations were the main reason for warning, with nearly a third of companies blaming contract issues, up from 17% in the same period in 2009.

Tom Jack, restructuring partner at Ernst & Young in Manchester, said: “UK plc could be in for another rough ride – this will be the last period in which the UK’s expansionary fiscal policy will help keep profit warnings low. A number of companies have already cautioned that they expect much tougher times ahead, when fiscal tightening reins in public sector and consumer spending.”