Number of profit warnings issued by Yorkshire firms falls slightly year-on-year

However, profit warnings issued by companies in the region between January and March 2024 saw a quarterly increase from the six issued in Q4 2023.

A profit warning is a declaration issued to the stock exchange by a listed company to warn that its profits for a given period will be significantly lower than the year prior.

Tim Vance, EY-Parthenon UK&I turnaround and restructuring partner in Yorkshire, said: “While the year-on-year fall in Yorkshire’s profit warnings is a step in the right direction, businesses in the region and across the UK continue to face marked challenges amid persistent economic stagnation.

“Although inflation is now on a downward trajectory, it is still higher than the Bank of England’s 2 per cent target, while interest rates remain high, which is creating significant challenges for listed consumer-facing companies in the region.

“Inflation and interest rates are both expected to fall substantially later in the year, which should provide foundations for better business investment and consumer spending prospects.”

Yorkshire businesses operating in the FTSE Consumer Discretionary industries issued the most profit warnings in Q1, highlighting the impact of ongoing cost-of-living challenges on household spending and consumer confidence.

Nationally, in Q1 2024, the number of profit warnings issued by UK listed companies fell seven per cent year-on-year to 70, dropping slightly from Q4 2023, when 77 warnings were issued.

Despite the quarterly fall in warnings, the number of companies warning for the first time in 12 months reached its highest level since Q1 2022, with 61 per cent of companies in Q1 2024 issuing a ‘new’ warning.

By the end of the first quarter of 2024, 39 companies had issued three or more warnings over the last 12 months, with just over a fifth of these companies delisting – or in the process of doing so - due to insolvency or acquisition.

Contract cancellations and delays were cited as the main reason for warnings by 29 per cent of companies, whilst higher costs and weaker consumer confidence each accounted for 17 per cent of warnings in Q1 2024.

Jo Robinson, EY-Parthenon Partner and UK&I turnaround and restructuring strategy leader, said: “Macro-economic pressures, while less intense, have not relented in 2024 and the full impact of interest rate increases is yet to be felt by many businesses. Larger companies and sectors such as luxury goods, which typically show resilience in economic downturns, are now starting to feel these pressures build.

“Companies still need to be scenario planning as the macro-economic pressures we have seen over recent years are far from over.”