The Courier & Advertiser (Perth and Perthshire Edition)
Scottish firms issue record number of profit warnings
The number of profit warnings issued by Scottish-listed businesses reached a record level in the first three months of 2020 – the highest seen in any previous quarter in the last 20 years.
Ten profit warnings were recorded by EY between January 1 and March 31, a 43% year-on-year increase on the same quarter of last year, when there were seven profit warnings.
UK-wide, 301 profit warnings were recorded in the first three months, almost equal to the entire number issued in the whole of 2019 (313) and 5% higher than the total for 2018 (287).
Compared to the same period last year (Q1 2019), warnings rose from 89, representing a 238% year-on-year increase.
Colin Dempster, EY’s head of restructuring in Scotland said: “Covid-19 has intensified the pressures businesses were already experiencing as a result of political uncertainties and rapid structural changes, which contributed towards UK profit warnings reaching a 10-year high in 2019.
“Scottish businesses have proved to be relatively resilient so far. While profit warnings are at an all-time high in Scotland, compared to other UK locations and the UK as a whole, the increase in Scotland’s figures has been more subdued in Q1.
“In January to March, warnings have increased 43% in 2020 versus 2019, while all other UK locations have at least doubled their figures year-onyear in the quarter.
“This will be partly due to the fact there are fewer listed businesses based in Scotland from sectors which have been more adversely affected by Covid-19, such as travel and leisure and hospitality.”
Over a fifth of the UK’s quoted companies issued a profit warning in Q1 2020, more than the percentage of companies warning in the whole of 2008 (17%).
Unsurprisingly, this hike was attributed to the Covid-19 crisis, which has temporarily paralysed many businesses, with very few sectors immune from its effects.
More than three-quarters (77%) of profit warnings blamed Covid-19.