Profit warnings at seven-year high among UK companies

The number of companies releasing profit warnings rose by 17 per cent to 449 last year, the highest yearly figure since 2001, according to new research published today by Ernst & Young.

Keith McGregor, restructuring partner at the accountancy firm, said: "The last 12 months have seen a significant leap in the number of profit warnings issued by listed companies in the UK, making 2008 the worst year of warnings since 2001. With credit markets still frozen and confidence continuing to deteriorate, the next 12 months look set to be equally dramatic, if not more so." Mr McGregor added that in the last quarter of last year there were 126 profit warnings by companies, the highest number recorded in a fourth quarter for seven years.

Worst hit were firms in the support services industry, with 18 warnings, financials with 12 and media with 11.

Retail was also badly hit with a record 52 warnings, 10 in the last quarter. High-street sales continue to fall as actual or feared redundancies and decreasing incomes savage confidence.

But there is some optimism, said Mr McGregor: "Cash-rich companies will have the chance to acquire fundamentally sound businesses that are struggling under a mountain of debt. Fortune will favour the brave."