Jan 29, 2023
Profit Warnings Issued by UK Firms Surge 50% on Higher Costs: EY
(Bloomberg) -- UK-listed companies issued 305 profit warnings last year, 50% more than in the previous year, as an increasing number of businesses struggled with higher costs, according to a report by consultancy firm EY-Parthenon.
Almost 18% of the UK’s 1,193 listed businesses issued a profit warning. That’s a similar proportion as during the global financial crisis in 2008, according to the report.
Retailers and travel and leisure were the FTSE industries that posted more warnings. While the pain was most acute in consumer-facing sectors, in the last quarter stress deepened and spread into other areas of the economy, such as industrial sectors, according to Jo Robinson, head of EY-Parthenon’s Turnaround and Restructuring Strategy in the UK and Ireland.
“Cost pressures are passing through supply chains, business confidence is weak, and credit markets are tightening. The latter factor prompted more profit warnings in 4Q 2022 than in any period since 2009,” said Robinson.
Credit conditions could tighten further this week. Investors and economists expect the Bank of England to raise its key rate a half point to 4% on Thursday, the highest since 2008, to tame inflation.
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