Midlands listed companies see uptick in profit warnings in first quarter of 2024

Dan Hurd

In the first quarter of 2024, listed companies in the Midlands saw an uptick in profit warnings with a total of nine issued – an 80% increase compared to the same period in 2023.

These figures also represent the highest number of warnings recorded since Q4 2022, as reported in the latest EY-Parthenon Profit Warnings Report.

Nationally, the UK experienced a 7% decrease in the number of profit warnings issued by listed companies in Q1 2024 compared to the previous year, totalling 70 warnings.

However, there was a slight decline from Q4 2023, which saw 77 warnings.

Despite this quarterly decrease, the proportion of companies issuing warnings for the first time in 12 months reached its highest level since Q1 2022, with 61% of companies in Q1 2024 issuing a ‘new’ warning.

By the end of Q1 2024, 39 companies had issued three or more warnings over the past year, with just over a fifth of these companies either delisting or undergoing the delisting process due to insolvency or acquisition.

Contract cancellations and delays emerged as the primary reasons for warnings, cited by 29% of companies, while higher costs and weaker consumer confidence each accounted for 17% of warnings in Q1 2024.

Within the Midlands region, companies operating in Consumer Discretionary FTSE sectors continued to issue the highest number of warnings, totalling five and comprising 56% of the region’s total warnings, seeing an increase of two warnings (66%) compared to the final quarter of 2023 (October–December).

Dan Hurd, turnaround and restructuring strategy partner at EY-Parthenon in the Midlands, said: “While the UK economy is predicted to see a subdued level of growth in 2024, high-interest rates, energy, supply chain and labour costs in addition to persistent inflation, continue to impact businesses in the region.

“As a result of these pressures, many consumer-facing companies within the Midlands continued to experience weaker performance in Q1 2024 as the prolonged cost-of-living crisis further impacted consumer spending in many areas. While inflation is forecast to fall as the year progresses, growth for many companies may remain slow and steady, so boards must look at ways to stimulate demand whilst remaining focused on costs and working capital to build resilience and safeguard against any future economic or geopolitical shocks.”

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