The biggest culprit, both because it forms such a large part of the market and because its performance has been so poor, is the oil and gas sector. The likes of Shell, BP and BG saw profits fall by a fifth last year. Pharmaceuticals, another major part of UK plc, were also a drag, with profits down 11 per cent as patents expired and competition from generic drugs intensified.
It wasn't supposed to be like this. At the start of 2013, analysts were forecasting profit growth. But as the eurozone recession wore on, oil-refining margins weakened and growth in emerging markets slowed, the numbers were relentlessly downgraded. Companies may even have taken advantage of investors' renewed optimism about the developed world economy to bury the last skeletons of the recession. "Companies are trying to kitchen-sink everything into 2013," says Jeremy Batstone-Carr, head of private client research at Charles Stanley.
If this was a corporate strategy, it worked: the stock market shrugged off downgrades last year on the basis that 2014 would be different, particularly in recovering Europe - and perhaps also because monetary policy remained very loose. Earnings multiples expanded instead of earnings themselves, with the average PE ratio rising from about 11 to roughly 12.5.
But that leaves the burden of expectation weighing on the current year, particularly as the 'tapering' of US quantitative easing has finally begun. Analysts are currently expecting 8 per cent profit growth, on average, led by a bounce back in financials (earnings due to grow 16 per cent), oil and gas (14 per cent) and mining (13 per cent).
As ever, the current earnings season is important not for what happened last year - companies have little scope to disappoint on that score - but for how management views the future. If outlook statements over the coming weeks strike a cautious note, analysts may well trim those forecasts for 2014, precipitating a correction.
This has already happened in a number of high-profile cases. Most recently, shares in Rolls-Royce fell about 15 per cent when the company warned that its military aerospace division would be affected by the slowdown in US defence spending. Investors took equally unkindly to an update from Tate & Lyle warning that its sales of sucralose, a sugar substitute, faced intense competition in China.
Both these companies have been hit by specific problems. But broader themes may emerge, foremost among them the strong pound. With some three-quarters of FTSE 100 profits made abroad, UBS reckons a 5 per cent appreciation in the exchange rate would reduce earnings growth by more than a third. This is particularly relevant for the many companies that have expanded aggressively in emerging markets, given the recent plunges in the Turkish lira and South African rand, for example.
Another potential source of disappointment is capital spending. Companies have for some years been cutting back on big projects, propping up profits but pushing investment as a proportion of UK output to a multi-decade low of 7 per cent. If clear signs of economic recovery encourage them to start spending again - as seems likely - sales may bounce faster than profits. This would be welcome in the long term, but may encourage companies to talk down expectations for 2014.
One strategy for avoiding further profit warnings may be parochialism. The FTSE 250 index, whose constituents make more of their money in the UK, is expected to grow profits by 9-10 per cent this year. Caroline Winckles of UBS Wealth Management reckons that's cautious; previous recovery periods suggest 12 per cent is more likely.
Such analysis needs to be treated with caution - circumstances change. But it does drive home a vital point. Earnings forecasts can change radically for both the better and the worse. Thinking about the likely direction of change matters just as much as the earnings multiple or dividend yield when assessing whether shares offer value. And it's those smaller companies with exposure to the UK and European recovery that offer the best chance of upgrades over the coming month.
