Profit warnings down at Yorkshire’s listed firms

YORKSHIRE'S LISTED companies are bucking a gloomy trend which has seen the number of UK profit warnings reach its highest figure since 2001, new research has revealed.

The research, conducted by Ernst & Young, has revealed that the number of warnings issued by quoted companies across the UK in 2007 was 384, the highest annual figure for six years.

And in the fourth quarter of the year, 107 profit warnings were issued by quoted companies, which was also the highest quarterly figure since the last quarter of 2001.

Although Yorkshire and the North East saw the number of profit warnings increase from six to eight from the third quarter of 2007 to the fourth, the total was down by a third compared to the fourth quarter of 2006.

And the Yorkshire region also saw the number of profit warnings in 2007 decrease from 41 in 2006 to 32. The figure also compared favourably to 2005 when 60 profit warnings were issued.

The highest number of warnings were in the software and computer services and electronic and electrical equipment sectors, followed by general retailers, general industrials, and healthcare equipment and services.

In Yorkshire, York-based rail firm Jarvis, recycling group Straight, of Leeds, and Leeds-based vehicle tracking systems company Minorplanet, issued profit warnings last year.

Across the UK, one in five of the warnings in the fourth quarter were blamed on the fallout from the US sub prime mortgage crisis and the credit crunch, with the majority who blamed turbulence in financial markets coming from outside the financial sectors.

Hunter Kelly, corporate restructuring partner at Ernst & Young in Leeds, said: “The impact of the credit crunch has spread beyond the financial sphere with a wave of profit warnings by the end of 2007 from non-financial corporates. It is clear that the UK economy will slow in 2008; the only question is by how much.”

The UK's general retail sector issued a record breaking 47 profit warnings in 2007, the highest number in this sector since 1999 when Ernst & Young began recording profit warnings.

Mr Kelly added: “In 2008 consumer led businesses must be predicting lower sales as discretionary spending comes under pressure from strained household budgets. Corporate activity and restructurings of poorer performing retailers look inevitable in the year ahead.

“Companies are going to have to get smarter with their forecasting and strategic decisions as they judge the effects of rising oil prices, dollar movements and the impact of the US economy.”