Improving outlook despite highest profit warnings since 2009
PROFIT warnings by quoted companies more than doubled in Yorkshire and the North East in the first quarter of this year, according to Ernst & Young.
Nine warnings were issued by companies compared to just four in the last quarter of 2012.
The figure was the highest number of warnings to be recorded in the region in a first quarter since 2009, when 19 were issued.
Compared to the first quarter of 2012 when there were seven, warnings were up 29% in 2013.
Hunter Kelly, Yorkshire restructuring partner at Ernst & Young, said: “Overall the UK economy appeared ‘flat as a pancake’ at the start of 2013. But conditions for the year ahead appear to be modestly improving, as seen by the rise in GDP for the first quarter.”
Sectors to issue warnings in the region in Q1 2013, included: support services (five), industrial engineering (two), software and computer services (one), and alternative energy (one).
“The support services sector is feeling the effects of cut backs from cancelled or delayed contracts and cash-strapped governments,” said Mr Kelly. “Falling growth expectations at home and in growth markets continue to create issues for industrial companies.”
The picture in Yorkshire and the North East compares to a 16% fall in the whole of the UK.
Seventy-two warnings were issued by UK quoted companies – main market and AIM-listed – 14 fewer than the previous quarter (86) and one less than the same quarter of 2012.
Mr Kelly added: “Of course, there are exceptions in any sector and one off incidents and structural changes will continue to catch out companies.
“For all businesses, the ability to be innovative, flexible and quickly adjust operational models will be a vital component of success in difficult markets.”
He concluded: “Although UK companies are issuing profit warnings at the same rate as 2012 there are some reasons to believe that this year will pan out more positively than the last – business confidence is returning and might keep UK GDP in positive territory for the remainder of 2013.”
