Fall in Yorkshire listed company profit warnings despite economic headwinds

Listed companies in Yorkshire issued 19 profit warnings in 2024, down 42% from the 33 warnings issued the previous year, according to EY-Parthenon’s latest Profit Warnings report.

Profit warnings in the region in quarter four 2024 were also down 50 per cent year-on-year to three, from six during the same period of 2023.

This marked the region’s lowest fourth quarter total since 2019.

Listed companies operating in the region’s FTSE Industrials super-sector issued the most warnings during 2024, mirroring a trend seen across the UK, with almost half of Yorkshire’s overall total (nine).

Nationally, one in five (19 per cent) UK-listed companies issued a profit warning in 2024, the third highest annual proportion in 25 years, behind only the 2020 pandemic (35 per cent) and the impact of the dot-com bubble burst and 9/11 in 2001 (23 per cent).

The report found UK-listed companies issued 274 profit warnings last year – including 71 in quarter four – down slightly from the 294 issued during 2023.

The leading factor behind profit warnings in 2024 was contract and order cancellations or delays, cited in 34 per cent of warnings, including 39 per cent in quarter four – the highest quarterly percentage for this reason in more than 15 years.

Increasing costs triggered nearly one in five (18 per cent) warnings in the last 12 months.

Tim Vance, EY-Parthenon UK&I turnaround and restructuring partner in Yorkshire, said: “Despite ongoing economic headwinds including sticky inflation, persistently high interest rates and geopolitical tensions, businesses in Yorkshire displayed resilience throughout 2024, with profit warnings down by almost half year-on-year.

“This is testament to the resolve of the listed businesses in the region, particularly as national warnings were only down marginally on 2023’s figures.

“Listed companies operating in the FTSE Industrials super-sector in the region issued the most warnings by a significant margin, which underscores the need for businesses operating in this sector to continue placing a sharp focus upon cash flow, stress-testing and scenario planning going forward.

“Delays in B2B spending reflect the caution that businesses are applying given the challenges of the upcoming tax rises announced in the Autumn Budget, with cost savings high on the agenda of CFOs.

“Businesses in sectors exposed to demand fluctuation from consumer spending pressures and high interest rates will need to continue to manage their cost base and adapt their business models.

“However, there is some light at the end of the tunnel on a broader scale, with the UK economy expected to perform slightly better this year than last.”

Jo Robinson, EY-Parthenon partner and UK&I turnaround and restructuring strategy leader, added: “It’s clear companies have faced an extraordinary succession of forecasting challenges since the pandemic, contending with interconnected disruptions to supply chains, material and energy costs, and the labour market, as well as higher interest rates.

“2024 was also an exceptional year for global geopolitical uncertainty and policy upheaval, with a record level of profit warnings linked to contract and spending delays as businesses held back from recruitment and investment.

“As a result, companies’ forecasting strategies need to respond to both short-term policy changes and deeper structural issues.

“Ordinarily, a sustained increase in company earnings pressures would be followed by a significant rise in insolvencies. But this cycle has been different.

“The availability of cheap, long-term debt and pandemic support provided breathing space for both businesses and stakeholders to explore consensual solutions and new restructuring options.”