West Midlands bucks national trend on profit warnings
QUOTED companies in the West Midlands bucked the UK trend by issuing just two profit warnings in the third quarter – despite the economic upheaval post-EU Referendum.
The picture was a dramatic improvement on the same quarter last year when six profit warning were made.
The Q3 picture in the West Midlands contrasts strongly with the UK as a whole where the number of profit warnings grew to 68 – two more than the previous quarter, but 11 fewer than the same period in 2015.
The latest EY Profit Warnings report shows that the worst hit region was London and the South East where companies issued 38 warnings in Q3 – more than half the total number of warnings issued across the whole of the UK.
Economic volatility post-Brexit led the reasons for the profit warnings, with 20 firms citing the fallout as a result of the vote.
Nevertheless, the report claims 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 (six), Travel & Leisure (four) and Real Estate Investment & Services (four).
Most companies 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 (six), Travel & Leisure (five), Household Goods (five) and Industrial Engineering (five).
The two profit warnings in the West Midlands came from the Industrial Engineering and Household Goods sectors.
Tom Lukic, EY’s restructuring partner in the Midlands, said: “Companies in the West 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.”
