Member Article

Yorkshire profit warnings hit three year high in 2014

Profit warnings in Yorkshire and the North East reached a three year high in 2014, according to EY’s latest Profit Warnings report.

There were 31 warnings in Yorkshire and the North East in 2014, compared with 25 in the region in 2013 and 26 in 2012.

The final quarter of 2014 saw seven profit warnings in Yorkshire and the North East. This was up from just three warnings in Q3, which represented an 11 and a half year quarterly low.

Nationally, profit warnings hit a six year high of 299 in 2014, with more FTSE 100 companies warning last year than at the height of the credit crunch.

Hunter Kelly, restructuring partner at EY in Yorkshire and the North East, said: “Sales falling short of forecasts, contract delays and cancellations, and pricing and competition issues continue to pose significant challenges for Yorkshire and North East PLCs, and were the most common reasons for issuing warnings in 2014.

“Last year proved that an improving macro outlook is no guarantee of smooth ride for UK PLC, while the political, policy and pricing uncertainties that hit confidence at the end of 2014 perhaps give us a taste of what’s to come in the first half of 2015.

“Companies in Yorkshire and the North East must continue to focus on building operational and capital resilience, adapting their forecasting and planning capabilities to have robust business models, and being able to react promptly to varying market conditions.”

Total profit warnings from FTSE 350 companies were just three shy of the record 90 issued in 2008.

Throughout 2014, 20% of warnings cited contract delays or cancellations, peaking at 27% in Q4 2014 as global uncertainties increased.

The rise in profit warnings nationally in 2014 to 299, compared to 255 in 2013, is more consistent with a period of low growth or global shock than an improving economic outlook.

Many companies have faced increasing challenges in recent months from increased geopolitical concerns including the Russian trade sanctions and the knock on effects of falling oil prices. Business resilience holds the key to delivering on forecasts and achieving the strategic intent.

This was posted in Bdaily's Members' News section by Clare Burnett .