The Courier & Advertiser (Perth and Perthshire Edition)
Profit warnings on the rise for Scottish firms
Profit warnings from listed Scottish companies in the first nine months of this year have now exceeded the total from 2017.
EY’s latest Profit Warnings report shows the third quarter of 2018 has generated half of the warnings from listed companies in Scotland this year.
It highlights the steady increase in the number of profit warnings this year.
There were two warnings in the first quarter, three in the second quarter and five in the third quarter – the highest in a three-month period since 2015.
Colin Dempster, EY’s head of restructuring in Scotland, said: “While these figures indicate a worrying trend of a rising number of Scottish companies issuing profit warnings this could be shortlived.
“Companies that choose to reassess their operating model and embrace new technologies are likely to be more resilient in the short-term and be wellplaced for future success post Brexit.”
Across the UK, there was a total of 68 companies issuing profit warnings in Q3 2018 with their share prices falling by an average of 21%. This drop is comparable to figures seen 10 years ago at the height of the financial crisis.
In a worrying sign for the UK economy, the percentage of quoted companies warning in the last 12 months has increased to 15.6% (206) compared to 14.4% (191) a year ago, according to the report.
UK-wide in the third quarter there were eight warnings from retailers and seven from travel and leisure firms.
Mr Dempster added: “It is no surprise to see the UK retail and the leisure sectors record high numbers of profit warnings. This is another sign of people being careful with how they spend their disposable income.
“Retailers have also contended with a year of weather extremes but, looking ahead, we anticipate one of the most demanding golden quarters leading up to Christmas trading in many years.
“If 2018 follows the pattern of recent years, consumers will hold back spending from now until Black Friday, which could result in heavy discounting to drive sales.”