Profit warnings rise across the Midlands

Listed companies in the Midlands issued nine profit warnings in Q3 2024, three more than the previous quarter, according to the latest EY-Parthenon Profit Warnings Report.

Nationally, UK-listed companies issued 84 profit warnings between July and September 2024, the highest quarterly total for two years.

The report found that profit warnings from UK-listed companies rose 11% compared with Q3 2023, and the proportion of companies that have issued a warning over the last year now stands at 19.2% – the highest rolling 12-month percentage since the pandemic and, before that, since 2001.

Leading factors behind Q3’s profit warnings included contract and order cancellations or delays, cited in 38% of warnings, the highest percentage for this reason in 15 years. Falling sales triggered also triggered a third (33%) of the quarter’s warnings.

Jo Robinson, EY-Parthenon Partner and UK&I Turnaround and Restructuring Strategy Leader, said: “Uncertainty has been a persistent feature of the business environment for several years now but, unusually, this latest surge in warnings wasn’t preceded by a sudden economic downturn or one-off event. This uncertainty seemed to intensify over the summer as companies awaited the new Chancellor’s Autumn Budget and US election and were also affected by ongoing heightened geopolitical tensions.

“The latest profit warning data gave us a real-time indicator of this shift in business sentiment and the impact this can have on company earnings.

“Time will tell whether this rise in profit warnings is a temporary spike or indicative of a longer-term trend, but against a volatile macroeconomic and policy backdrop, coupled with profound changes in technology and consumer behaviour, abrupt adjustments to earnings expectations appear increasingly likely.”