According to accountancy firm EY’s latest Profit Warnings report, warnings among North West firms is the same as in 2018 but there has been a steep rise across the UK
Stock market-quoted companies issued eight profits warnings in the second quarter of 2019 – the same number as in the first quarter, new figures reveal.
According to accountancy firm EY’s latest Profit Warnings report, the 16 warnings for the six months to June 30 is also the identical number issued in the first half of 2018. It also show that on he day of warning, the average share price fall for North West companies in was 26.3%.
Nationally, a total of 69 profit warnings were issued in the second quarter – down 22% on the previous quarter (89) but up 19% year-on-year and representing the highest second quarter total since 2008.
The FTSE sectors issuing the most warnings in Q2 across the UK were general retailers (10), chemicals (6), construction and materials (6), financial services (6) and support services (6).
Almost one in five companies warning blamed Brexit as a contributory factor, and in the last year, 14 FTSE sectors have now recorded Brexit-related profit warnings, five of which were added in Q2.
Sam Woodward, EY restructuring partner for the North West, said: “There is now clear evidence that prolonged Brexit uncertainty has created a hiatus in business activity, with companies struggling to forecast and plan. The economic impact is spreading, affecting a broad range of sectors.
“Slowing global growth and fluctuations in trade and geopolitical tensions also looks likely to add a further unpredictable dimension to the second half of 2019.”
While the UK economy grew by a better-than-expected 0.5% in Q1 2019, according to EY ITEM Club, it is likely to have suffered a mild contraction in the second quarter. Lumpy retail sales suggest that UK households still have the urge to spend, but don’t have the confidence or means to buy at will.
Mr Woodward added: “Consumer spending has been resilient until now, but sales of discretionary and high-value purchases – such as cars – are coming under particular pressure as confidence slips. There are signs that the spring sunshine brought consumer spending forward, but retail sales have lost momentum in Q2.”