Profit warnings jump to highest level since height of financial crisis
Saturday 26 January 2013
Company profit warnings jumped to their highest level since the height of the financial crisis last year amid fears over the economy and slower-than-expected demand from China.
The number of UK stock market listed companies warning over profits leapt to 86 in the fourth quarter from 68 in the previous three months, taking the total to 287 or 15% in 2012 - the highest since the credit crunch and banking sector meltdown in 2008.
The report by accountancy giant Ernst & Young comes after gross domestic product (GDP) figures today revealed output shrunk by 0.3% in the final three months of the year, fuelling fears the UK is on course for a triple dip recession.
Industrial companies were the hardest hit, with the electrical and industrial sectors each issuing 17 profit warnings last year, up from five and eight respectively in 2011.
Alan Hudson, head of Ernst & Young's UK restructuring team, said rising uncertainty at the end of 2012 had led to a fall in demand.
He said: “Slower-than-expected demand from China in particular landed heavy blows on companies reliant on emerging market growth, which would have cancelled out declining sales elsewhere.”
Transport companies also suffered, with nearly 40% of listed companies in the sector issuing warnings, against 16% in 2011.
But despite a spate of high profile retail collapses this month, with the likes of HMV, Jessops and Blockbuster calling in the administrators, the number of retail profit warnings fell to 17 last year, from 39 the previous year.
Mr Hudson said the number of warnings stayed low because retailers had already factored in a squeeze on consumer spending.
He added the summer of celebrations had also provided a welcome boost to trading, helping to offset the washout summer.
The travel and leisure sector also fared better last year, issuing just 11 profit warnings, compared with 14 the previous year.
Experts are predicting a steadier year ahead and a fall in the number of profit warnings, despite concerns that Britain is heading for a triple dip recession.
Keith McGregor, head of restructuring for Europe, Middle East and Africa at Ernst & Young, said: “Eleventh hour deals in the US and eurozone have removed the immediate threat to global markets, raising hopes of a more stable year in which a recovery can plant stronger roots.”
- 1 Rihanna 'nude photos' claims emerge on 4Chan as hacking scandal continues
- 2 Frank Lampard equalises for Manchester City against Chelsea: how the internet reacted
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Rihanna 'nude photos' claims emerge on 4Chan as hacking scandal continues
Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
Scotland could still declare independence – even without referendum, says Alex Salmond
Jennifer Lawrence leaked 4Chan sex video branded 'fake' by forum users
Britain First picture: Photographer 'horrified' after first Afghan policewoman killed by Taliban used for 'ban the burka' campaign
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...