Eight profit warnings issued by listed companies in Yorkshire in Q1 2023
Eight profit warnings were issued by UK-listed companies in Yorkshire in quarter one 2023, up 60% from five in the same period last year, according to EY-Parthenon’s latest Profit Warnings report.
The number of profit warnings issued by companies based in the region during the first quarter of the year was the second-highest since quarter two 2020, despite being marginally down quarter-on-quarter from the nine warnings issued in quarter four 2022.
In line with the broader UK trend, consumer discretionary businesses in Yorkshire issued the joint-highest number of profit warnings (three) in quarter one.
There were also three warnings from healthcare companies across the region.
Only London, the South East and the North West saw more warnings issued than Yorkshire in quarter one 2023.
Tim Vance, EY-Parthenon UK&I turnaround and restructuring partner in Yorkshire, said: “Despite edging down slightly quarter-on-quarter, the volume of profit warnings issued in Yorkshire remains high year-on-year.
“As has been the case across the UK, consumer-facing companies in the region have continued to face challenges from inflation, with consumers tightening their belts as the cost living remains high.
“Whilst Yorkshire has seen a higher number of healthcare profit warnings than any other UK region in quarter one 2023, the cases have been situation-specific rather than being reflective of sector trends.
“The economic outlook is starting to look more positive, with inflation forecast to fall later this year and consumer spending set to increase.
“However, businesses should look to prioritise forward planning and stress testing, placing a strong focus on cash with further challenges likely ahead later in 2023.”
Nationally, UK-listed companies issued 75 profit warnings between January and March 2023, the highest first quarter total since the early stages of the pandemic in 2020.
The Profit Warnings report reveals that the number of warnings issued in the first quarter of 2023 exceeded the 72 issued in quarter one 2022 and that quarterly profit warnings have remained above the 10-year quarterly average, excluding 2020, for five consecutive quarters.
The highest number of quarter one warnings was in 2020, when 305 were issued.
More than a third (35%) of profit warnings cited delayed, reviewed, or cancelled contracts, up from 21% in the same period in 2022, as customers paused or cut spending amid volatile and unreliable demand.
The report found that since the start of 2022, 98 companies have issued at least two profit warnings, while a significant cohort of UK companies have faced particularly challenging conditions after entering the three warning “danger zone”.
Of the 31 companies that have issued three warnings since the start of 2022, 29% have since delisted or are in the process of being sold.
This marks a greater-than-average market dropout rate, as typically just one-in-five companies delist within a year of their third warning, most due to insolvency.
