Sharp rise in number of profit warnings in the region
Listed companies in the North East and Yorkshire issued 37 profit warnings last year, a 32% rise on 2017.
The news follows a fourth quarter that saw ten companies in the region issue warnings, according to EY’s latest report, an increase on the previous quarter and also an increase on the region’s performance in the final quarter of the previous year.
Of the ten warnings made in Yorkshire and the North East, a number of companies were from sectors associated with technology.
Nationally, one in six quoted companies issued profit warnings in 2018, the second highest level since 2008. In 2018, UK quoted companies issued 287 profit warnings, a rise of 4% year-on-year.
Hunter Kelly, EY’s head of restructuring for Yorkshire and the North East, said: “It is particularly significant that we have seen more ‘new’ companies warning in 2018.
“It demonstrates that there are more wide-reaching pressures and that the rising uncertainty on confidence and demand is having an impact.
“The average fall in share price indicates that investors, like many businesses, are positioning for the worst.
“Recent events have created further uncertainty and with no obvious end in sight for some of them there is no let-up in the factors that could derail a business plan.”
Rising uncertainty wasn’t the only reason profit warnings spread in 2018.
The weather and regulatory issues were to the fore, such as the changes to diesel regulation in the automotive sector and increasing gaming regulation.
China’s slowdown also particularly hit automotive and technology sales.
FTSE General Retailers issued the highest number of profit warnings in 2018, followed by Travel and Leisure, Support Services and Software & Computer Services.
In the last quarter General Retailers issued eight warnings, taking the annual total to 36.