UK listed company profit warnings rise for seventh consecutive quarter
Stubborn inflation and a rising interest rate environment have driven a tighter and more expensive lending environment.
According to EY-Parthenon's latest Profit Warnings report, UK-listed companies issued 66 profit warnings between April and June 2023, the highest second quarter total in three years.
In the last 12 months, 17.9% of public companies have issued a profit warning, marking the highest level since the Global Financial Crisis in 2008, excluding the Covid-19 pandemic.
Stubborn inflation and a rising interest rate environment have driven a tighter and more expensive lending environment, which has played an important role in the warnings for the quarter, the report noted.
UK company profit warnings spike 50% in 2022
«Rising interest rates have significantly changed credit conditions for companies that need to refinance, and businesses have started to feel the effect of a more expensive borrowing environment, especially in sectors where credit availability has been a key driver of activity,» said Jo Robinson, EY-Parthenon partner.
«It is now clear that the effects of these low-growth conditions are spreading to nearly all corners of the UK economy, and this quarter we have seen earnings pressure extend up the value chain into the mid-market.»
More than a quarter (29%) of profit warnings during the quarter came from companies with revenues between £200m-£1bn, marking the highest proportion of warnings issued by this group of companies in four years.
According to the report, the sectors with the most warnings in Q2 2023 were FTSE Industrial Support Services (seven), FTSE Construction and Materials (six), followed by FTSE Retailers (five) and FTSE Pharmaceuticals & Biotechnology (five).
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