Tariffs impact cited in almost two-thirds of profit warnings from UK-listed companies with DB sponsors so far in Q2

• Nearly two-thirds (63%) of the warnings issued by UK-listed firms with DB sponsors so far in Q2 (up to 14th May) have cited the impact of tariffs and resulting global trade disruption
• UK-listed companies with a Defined Benefit (DB) pension scheme issued 18 profit warnings during Q1 2025 – matching the same period in 2024
• Profit warnings from UK-listed firms with DB sponsors accounted for almost a third (29%) of the 62 warnings from all UK-listed businesses in Q1
• The main drivers of warnings from UK-listed companies with a DB pension scheme in Q1 were contract and order cancellations or delays (33%), geopolitical turbulence (22%) and rising costs (17%)

Almost two-thirds (63%) of the profit warnings issued by UK-listed companies with a Defined Benefit (DB) pension scheme so far in Q2 (up to 14th May) have cited the direct or indirect impact of tariffs and resulting recent global trade disruption, according to EY-Parthenon’s latest Profit Warnings report.

While UK-listed firms with DB sponsors issued 18 profit warnings in the first quarter of the year, equalling the number issued in Q1 2024, of the eight issued so far in Q2, five cited the direct or indirect impact of tariffs.

Across all UK-listed companies, 62 profit warnings were issued in Q1 2025, with nearly a third (29%) coming from firms with DB pension schemes.

A third (33%) of warnings from UK-listed companies with a DB pension scheme during the first quarter cited contract and order cancellations or delays – the highest percentage for this cause in two years. Geopolitical turbulence (22%) and rising costs (17%) were the other main reasons behind warnings.

More than a quarter (26%) of all UK-listed companies with a DB pension scheme have issued a profit warning in the last 12 months.

Karina Brookes, UK Pensions Covenant Advisory Leader and EY-Parthenon Partner, said: “This latest data aligns with the discussions we’re currently having with sponsors across a range of sectors. Even businesses that are less directly impacted by tariffs are facing disruption caused by indirect impacts such as the knock-on effect on supply chain and wider economic uncertainty. Trustees should continue to engage with sponsors to fully understand the different scenarios they are considering and any impact on core business operations, including supply chain shifts. As geopolitical uncertainty continues, businesses might look to engage with schemes to access surpluses in line with new proposed government policy.”

Paul Kitson, UK Pensions Consulting Leader at EY, added: “Ongoing geopolitical and economic uncertainty is challenging the pensions sector, and both trustees and sponsors are working hard to ensure they are meeting the diverse needs of pension scheme members, employees, and corporate sponsors through turbulent times. Confirmation that DB pension scheme surplus release will be included in the upcoming Pension Schemes Bill presents a positive opportunity to enhance covenant, but ongoing market volatility means the terms and structure of any surplus release will need to be carefully managed to ensure there is no inadvertent reduction to value.

“To navigate this, trustees and sponsors will need to develop a clear framework that balances the diverse needs of these stakeholder groups, and to undertake an objective assessment of the employer position before and after surplus release to ensure positive outcomes are delivered for all.”