UK profit warnings in Q2 rose to highest level since 2008
UK quoted firms have posted the highest number of profit warnings in a second quarter since 2008, according to a new report by accounting firm Ernst & Young.
EY stressed that it’s hard to isolate the impact of Brexit from other issues.
UK-listed firms posted 66 profit warnings during the second quarter of 2016, up from 55 profit warnings in the same period last year.
Most of the profit warnings were made because of slower than expected sales.
Only 11% of the profit warnings in the second quarter were due to the EU referendum, with companies primarily citing the impact of uncertainty on demand and the weaker pound.
In the year-to-date there have been 321 warnings from 17.6% of UK quoted companies compared to 297 warnings from 16.6% of companies at the same point in 2015.
Travel, leisure, retail, and support services were the worst hit sectors.
The FTSE sectors leading profit warnings in the second quarter of the year were: Support Services (14), Travel & Leisure (8), General Retailers (7) and Media (6).
“It’s been a dizzying unpredictable time since the EU referendum. The initial impact of this uncertainty appears to have pushed profit warnings to their highest second quarter total since 2008,” said Alan Hudson, EY’s head of restructuring for UK & Ireland.
He added: “But, ultimately it’s hard to separate the Brexit effect from the underlying issues that brought high levels of warnings in previous quarters. Many UK companies still face sluggish, disrupted and competitive markets, with Brexit adding further layers of challenge, but also opportunity.”