According to the latest data from accountancy firm EY, 20 profit warnings have been recorded in the region since January 1, with many due to the coronavirus economic shock. Tony McDonough reports
Stock market-listed companies are issuing profit warnings at an “unprecedented rate” as the economic effects of the coronavirus lockdown start to bite.
According to the latest data from accountancy firm EY, 20 profit warnings have been recorded in the region since January 1, more than double the number (eight) issued in the first three full months of 2019.
And 14 (70%) of the warnings issued so far in 2020 specifically blamed the impact of COVID-19 for a material downgrade to their profit expectations reported EY, which has been tracking UK profit warnings for more than 20 years.
When analysing all UK profit warnings made in 2020, compared to Q1 2019, EY found the Midlands has experienced the greatest year-on-year increase (209%), followed by the South East (188%), the North West (150%) and Yorkshire & the North East (100%).
Sam Woodward, EY restructuring partner in the North West, said: “COVID-19 has profoundly affected North West businesses’ ability to plan and forecast, driving a significant rise in profit warnings, which are currently being issued at an exceptional rate.
“The impact is being felt throughout the economy, most notably in sectors closely connected to consumer spending, including travel, leisure and retail. With a partial lockdown set by the Government last week, we are likely to see an increasing impact on other sectors that require ‘employee proximity’ such as construction and manufacturing.”
UK quoted companies have issued 167 COVID-19 related profit warnings (figures correct as at 1pm on Friday, March 27), equivalent to around 13% of the whole of the Main Market and AIM.
Almost 25% (38) of the total number of COVID-19-related profit warnings issued in the UK in 2020 were from companies in the FTSE Travel & Leisure sector. Others hit hardest include sectors affected by social distancing measures, such as retailers, housebuilders and media companies – especially those impacted by event cancellations and falls in advertising spend.