Business uncertainty blamed for glut of profit warnings

Profit warnings from UK-listed companies reached a two-year high between July and September, with 84 alerts issued, according to a report by EY-Parthenon, which blamed business uncertainty. The figure is up by 11 per cent on the third quarter of last year.
The study says that nearly one in five UK-listed companies (19.2 per cent) issued a profit warning in the past 12 months, the highest rolling percentage since the Covid pandemic.
Contract and order cancellations or delays were cited as drivers, affecting 38 per cent of companies that issued warnings. Lower sales contributed to 33 per cent of warnings, indicating that broader issues in sustaining revenue were affecting businesses.
Jo Robinson, turnaround and restructuring strategy leader at EY-Parthenon, said: “This uncertainty seemed to intensify over the summer as companies awaited the new chancellor’s autumn budget and were also affected by ongoing geopolitical tensions.
“The latest profit warning data provided a real-time indicator of this shift in business sentiment and its impact on earnings.”
Robinson added: “Time will tell whether this rise in profit warnings is a temporary spike or indicative of a longer-term trend but companies must proactively address emerging issues before they escalate.”
The FTSE sectors hit hardest in the quarter were industrials and technology, with businesses in industrial support services and technology hardware and equipment issuing the most warnings.
Industrial support services, a sector that includes business service providers, industrial suppliers and recruitment companies, had ten profit warnings, largely driven by contract delays and cancellations.
Customer caution in committing to new orders was especially evident in this sector, where more than 90 per cent of warnings stemmed from order slowdowns or cancellations.
Other affected FTSE sectors included software and computer services, with seven profit warnings; media, travel and leisure, and investment banking and brokerage — each with five.