Listed industrial engineering companies based in the West Midlands issue the highest number of profit warnings in the UK
Listed companies in the industrial engineering sector have issued the highest number of profit warnings in the West Midlands, according to a report released by EY today.
The analysis has found that the sector was responsible for 21% (68 out of 331) of all profit warnings issued by listed companies in the region over the last 20 years. When comparing these figures to the rest of the UK, listed industrial engineering companies in the West Midlands issued more warnings here than in any other region.
The sectors to issue the second and third highest number of profit warnings over the last two decades (1 January 1999 – 31 July 2019) were FTSE Support Services (38) and FTSE Software & Computer Services (33).
Twenty-five per cent of PLCs in the wider region of Midlands & East Anglia delist within a year of issuing three or more warnings.
A quarter of PLCs based in the Midlands & East Anglia – compared to 22% nationally – have de-listed within a year of issuing three or more successive profit warnings, according to the report.
In analysis spanning 20-years, EY found the third consecutive profit warning to be a ‘bruising or even a knock-out blow’ for listed businesses in the region. Eighteen per cent of local companies faced a major restructuring event, including an administration, distressed sale, CVA or debt restructure within a year of issuing three or more profit warnings.
Over the last two decades, Midlands & East Anglia saw a peak in the number of warnings issued in a year in 2008 (73) and a low in 2003 (23) compared with 40 issued in the first three quarters of 2019.
Dan Hurd, EY’s head of restructuring for the Midlands, said: “When EY started tracking UK profit warnings in 1999, just 13% of households had internet access, the first smart phone was still a decade away and fax machines still had a prominent place in our offices.
“In the last two decades we’ve seen radical changes not only in technology, but also our economy and capital markets. In 2019 news travels fast, and capital also moves with increasing pace. Combined with a heightened level of uncertainty, this has significantly changed the speed of stakeholder response to profit warnings.”
“Here in the West Midlands we have a particular strength in engineering and manufacturing, as the region has successfully built upon its industrial past. Therefore, it is a potential ‘red flag’ that the Industrial Engineering sector has been responsible for the most profit warnings in the region. This sector is responsible for a significant number of jobs and economic activity and it is important that the West Midlands remains an attractive and profitable place in which these businesses can thrive.”
