EY’s latest Profit Warnings report reveals 34 stock market-listed companies in the region issued warnings, with nine of those coming in the final quarter of the year 

There was a 21% surge in the number of North West companies issuing profit warnings in 2017, new data shows.

EY’s latest Profit Warnings report reveals 34 stock market-listed companies in the region issued warnings, with nine of those coming in the final quarter of the year.

Across the UK, 2017 was a year of two-halves, with both the number of profit warnings and investor reaction increasing significantly in the final two quarters.

The median share price drop on the day of warning rose from 12% in the first half of 2017 to 14.9% in the second half and 15.2% in Q4 2017 – the highest since the Brexit vote quarter in 2016.  

FTSE support services companies issued the most warnings in 2017 (Q4: 11, 2017 overall: 42). Contract delays and uncertainties continued, while rising prices have exposed weaknesses in contract portfolios and internal controls.

Other sectors exposed to rising costs and business and consumer uncertainties complete the list: software & computer services (Q4: 11, 2017 overall: 27), general retailers (Q4: 6, 2017 overall: 24), and travel & leisure (Q4: 5, 2017 overall: 22).

According to the report, 30% of all profit warnings in 2017 cited cost and competitive pressures, compared to 16% in 2016.

Contract uncertainties also continued in 2017, with 25% of companies citing delays or cancellations, including 40% of warnings from the FTSE support sector and 60% from FTSE software & computer services.

Sam Woodward, EY’s head of restructuring in the North West, said: “Companies that issue profit warnings are now under greater scrutiny and investors are reacting with less patience, especially in sectors where shareholders view warnings as a sign of deeper issues rather than a one-off event.”