EY - Restructuring

UK Profit Warnings Q1 2017

A new era

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Profit warnings point to changing balance of the UK economy

UK quoted companies issued 75 profit warnings in the first quarter of 2017, two more than the previous quarter and one less than the same period of last year.

Key highlights:

  • UK quoted companies issued 75 profit warnings in Q1 2017
  • Changing profile of UK profit warnings reflects opportunities and challenges
  • Retail sector warnings hit record low for first quarter, but recent administrations highlight rising pressures

This seemingly stable picture masks falling expectations and significant changes beneath the surface that reflect the UK’s changing economic balance.

The FTSE sectors issuing the most profit warnings in Q1 2017 were:

  • Support Services (11)
  • Travel & Leisure (8)
  • Nonlife Insurance (5)
  • Software & Computer Services (5)

Profit warnings from industrial and commodity sectors have fallen significantly since the end of 2015, helped by a higher oil price and improving global economy. But, the impact of a weaker pound and rising pricing pressures loom large. In Q1 2017, 28% of warnings cited rising costs and pressure on prices, compared with 15% in 2016. At the same time, uncertainty increasingly prevails, with 28% of warnings citing contract delays or cancellations – the highest proportion of warnings in more than five years.

EY - UK warnings profit Q1 2017

Download Profit Warnings Q1 2017 837K, April 2017