Warnings on profit lowest for 15 years

PROFIT WARNINGS issued by listed businesses in the first quarter of 2017 in Yorkshire fell to the lowest recorded number for over 15 years, according to a report.

Only two listed businesses in the Yorkshire and North East region issued profit warnings, according to EY’s latest Profit Warnings report.

This quarter’s figures represent a drop from four in the previous quarter. In the same quarter last year five profit warnings were recorded.

However, this stable picture masks falling profit expectations in certain sectors and changes to come that reflect the UK’s changing economic balance.

Profit warnings from industrial and commodity sectors have fallen significantly since the end of 2015. However, the impact of a weaker pound and rising pricing pressures loom large.

In the first quarter of 2017, 28 per cent of warnings cited rising costs and pressure on prices, compared with 15 per cent in 2016.

At the same time, uncertainty increasingly prevails, with 28 per cent of warnings citing contract delays or cancellations – the highest proportion of warnings in more than five years.

Hunter Kelly, EY’s head of restructuring for Yorkshire and the North East, said: “Improving global demand and the positive impact of a weaker pound on exports, combined with falling expectations in stressed areas, should limit the number of profit warnings across the UK in the near-term.

“However, increased overheads, political and regulatory change, and digital disruption are increasing pressure on sectors, especially in consumer and business services.”

Last month, building materials suppler SIG reported a fall in profits following weak demand, tougher competition and delays to projects. Project management consultancy WYG also issued a profits warning last month.