The latest EY-Parthenon quarterly analysis of UK profit warnings paints a bleak picture. No fewer than 66 UK-listed companies issued profit warnings between April and June 2023, the seventh consecutive quarter of increased profit warnings year on year – the longest sequence since 2008-09.
In the past 12 months, nearly 18 per cent of UK-listed companies have issued a profit warning as recession-like conditions impacted almost every part of the UK economy and new shocks and headwinds hit earnings. At the start of 2023, contract delays and cancellations were the dominant themes as businesses facing uncertainty and cost pressures reassessed their spending plans. The story continued into the second quarter, with contract and cost-cutting stress spreading from technology companies into the industrial support sector, which issued the highest number of profit warnings.
The impact of tighter credit conditions triggered one in five profit warnings in the latest quarter, the highest proportion for 15 years. Companies are feeling the impact on their own balance sheets, on their customers, and on demand in the wider economy, especially in sectors where credit availability has been a key driver of activity, such as the housing market.