North West profit warnings rise
PROFIT warnings issued by North West listed companies have doubled in the third quarter of 2008.
Eight were issued in the three months to September 30, up from four in the previous quarter.
Tom Jack, restructuring partner at Ernst & Young in Manchester, said that after a blip in the second quarter profit warnings in the region are back on par with the four-year average.
“Two thirds of North West companies warning this quarter blamed difficult trading conditions for their woes,” he added.
Across the UK 111 profit warnings were issued – the highest third quarter figure since September 2001 and up almost a third on the same time last year.
Mr Jack said the worst is almost certainly yet to come for UK corporate.
“It’s a gloomy picture and in all likelihood we will look back on the third quarter of 2008 as the start of a UK recession.
“The outlook for the next year looks anything but rosy – we expect a peak in insolvencies around 2009-10, with the profit warning peak following a similar timetable.”
The data was mirrored by accountancy group KPMG’s National Business Confidence survey which found that confidence has hit a new low.
Two thirds of senior executives questioned in September by Opinion Leader Research on behalf of KPMG now view the prospects for UK business as either bad or very bad – compared to only one third who held this view back in May.
A further 47% of the 204 respondents believe that the UK economy is already in recession, while 86% claim that the credit crunch has had a negative impact on their organisation.
Malcolm Edge, chairman of KPMG in the north, said: “The results of our latest business barometer are truly the bleakest we’ve ever seen – and no small wonder.
“The past month has been one of unprecedented turmoil in the financial markets, with each day bringing yet another extraordinary development that, even in isolation, would have seemed astonishing twelve months ago.”
