EY - Restructuring

UK Profit Warnings Q4 2016

The calm before the storm

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UK quoted companies issued 73 profit warnings in Q4, five more than Q3, but 27 fewer than Q4 2015, when warnings spiked following the drop in oil price.

Key highlights:

  • UK quoted companies issued 73 profit warnings
  • Level of warnings reflects the mixed impact of the Brexit vote
  • In 2016 retailers issued the most warnings for five years, despite rising sales.

The number of profit warnings reflects relative stability in both the UK and global economy in the second half of 2016, with UK consumer spending in particular defying expectations.

The FTSE sectors leading the warnings in Q4 were:

  • Support services (17)
  • General retailers (7)
  • General financial (5)
  • Construction and materials (4).

Behind the headlines, however, there are less positive signals.

A record level of FTSE support services warnings in 2016 suggests businesses are starting to react to uncertainty, as does the 27% of warnings citing contract delays or cancellations. Companies exposed to the weak pound are also reporting increasing pressure on earnings, with 11% of warnings citing adverse exchange rates.

Download Profit Warnings Q4 2016 2Mb, January 2017