Ernst & Young: UK quoted companies issue the most profit warnings

By Rob Starr, Content Manager, Big4.com

UK quoted companies issued the most profit warnings since the height of the financial crisis last year, as mounting risks across the Eurozone and US, combined with a slowdown of growth in China, knocked business confidence and reduced demand, encouraging a climate of inertia.

In total, over 15% of UK quoted companies issued profit warnings in 2012, the highest annual proportion of companies warning since 2008, when nearly 18% warned. Concern over the economic outlook for 2013 peaked in the final quarter of last year, when 26 companies cited delayed or cancelled contracts in their profit warning – higher than the previous peak in 2008.

According to Ernst & Young’s latest quarterly Profit Warnings report, UK quoted companies – Main Market and AIM listed – issued 86 profit warnings in Q4 2012, 26% more than the previous quarter, taking the 2012 total to 287 – the highest since 2008.

Industrial companies saw the largest increase in the number of profit warnings in 2012, with customers reacting to a volatile economic landscape by delaying orders and destocking. The FTSE Electronic & Electrical Components and FTSE Industrial Engineering sectors both issued 17 warnings in 2012, up from five and eight respectively in 2011.