EY’s latest Profit Warnings report reveals the North West’s performance bucks the national picture, which saw a 4% increase year on year to 287 profit warnings
Listed companies in the North West issued 29 profit warnings in 2018, a 15% decrease on the 34 warnings in 2017.
EY’s latest Profit Warnings report reveals the North West’s performance bucks the national picture, which saw a 4% increase year on year (to 287 profit warnings). Nationally, 16.8% quoted companies issued profit warnings in 2018, the second highest level since 2008, when the figure was 17.7%.
In the final quarter of 2018, EY recorded 88 warnings nationally (9% higher than the same quarter in 2017), representing the highest fourth-quarter total since 2015 (100). On the day of warning, companies saw their share prices fall by a record average of 22.6% in Q4 2018, topping the previous peak in Q3 2008 (22.5%).
The report also found that 74% of companies issuing profit warnings in Q4 2018 hadn’t warned in the last year – the highest proportion of ‘new’ companies warning in over eight years – significantly more than 52% in Q1 2018.
Sam Woodward, EY’s head of restructuring in the North West, said: “It is particularly significant that we have seen more ‘new’ companies warning in 2018. It demonstrates that there are more wide-reaching pressures at work, namely the impact of rising uncertainty on confidence and demand, contributing to a wider spread of profit warnings.
“Investors, like many businesses, are positioning for the worst – which could provide some upside to 2019. Recent events have created further political and economic uncertainty and there is no let-up in the pace of structural change.
“Rising uncertainty wasn’t the only reason why profit warnings spread in 2018. The weather continued to confound normal seasonal patterns. Regulatory issues came increasingly 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. But, rising uncertainty has certainly exacerbated these and existing pressures.”
FTSE General Retailers (36) issued the highest number of profit warnings in 2018, followed by Travel & Leisure (29), Support Services (27) and Software & Computer Services (23).