Latest EY-Parthenon’s latest Profit Warnings report reveals a fall in profit warnings among listed companies in the north of England despite ongoing supply chain and cost issues

Listed businesses in the north of England issued five profit warnings in Q3 2021, down 44% from the nine recorded in Q3 2020, according to EY-Parthenon’s latest Profit Warnings report.

The number of warnings issued (5) between July and September is the lowest of any quarter since Q4 2014 (4) and a 38% decrease on Q2 2021. ‘Supply chain and cost-related issues’ were cited in four out of five of the warnings.

Sam Woodward, EY-Parthenon turnaround and restructuring strategy partner in the North West, said: “Although profit warnings issued by listed companies in the North have fallen – bucking the national trend –   it’s clear that businesses are facing significant challenges with their supply chain and the cash stresses that have cascaded through the economy.

“Over the last 18 months, government support has mitigated the impact of massive changes in the UK economy. The remainder of the year will reveal those most vulnerable, as the government removes most, but not all of its props.”

Those in FTSE Consumer Discretionary sectors – including retailers and travel and leisure – issued the most warnings in the north in Q3 2021.

While profit warnings in the north fell, the overall number issued by UK listed companies rose to 51 in the third quarter of the year, up 19 from Q2 2021, as threats to growth and profitability increased.

The report reveals that whilst a post-pandemic demand surge boosted sales for many businesses over the summer months, it has also exposed vulnerabilities in supply chains and energy and labour markets, with 43% citing these pressures as the reason for their profits warning.

Nearly two-fifths (39%) of companies warning were also affected by the fallout of COVID-19 – down from 72% in the previous quarter.

While the direct impact of the pandemic is waning, the increase in supply and cost pressures, and the end of government furlough support, will add to the challenge – especially for sectors where demand hasn’t yet returned to pre-COVID-19 levels.