South East: EY issues highest Q2 profit warnings since 2008

EY’s latest Profit Warnings report notes that quoted companies in the South East have issued more than double the number of profit warnings in the second quarter of this year than in the same quarter in 2015.

The figure of 21 warnings, compared with 10 in the quarter last year, is the highest level recorded in the quarter since 2008 when there were 22. It was the eight warnings by support services in the FTSE which led the way.

In total, 66 UK quoted companies issued profit warnings during the quarter, most triggered by slower than expected sales.  However, 11% of the profit warnings relate directly to the EU referendum, with companies primarily citing the impact of uncertainty on demand and the weaker pound.

Richard Baker, EY’s managing partner in the South East, commented: “It’s been a dizzyingly unpredictable time since the EU referendum. But ultimately it’s hard to separate the Brexit effect from the underlying issues which brought higher 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.”

He concluded: “The need to adapt, innovate and capture limited growth in constantly changing markets continues unabated. Companies will need an integrated response, and the winners will be those which demonstrate clear thinking about their priorities, build in resilience to cushion the knocks and ensure that they can take advantage of opportunities.”