Listed companies in Yorkshire issued nine profit warnings in the second quarter, says EY-Parthenon

The number of profit warnings issued by companies based in the region during the second quarter of the year was the joint-highest since the first quarter of 2020, and represented a quarter-on-quarter increase following the eight warnings issued in the first quarter of 2023.

Nationally, profit warnings issued by UK-listed companies between April and June 2023 marked the highest second quarter total in three years, with 66 warnings issued.

In a statement, an EY spokesman said: “Consistent with the broader national trend, industrial FTSE sectors issued Yorkshire’s highest number of profit warnings (four) in the second quarter of 2023 as wavering business confidence caused spending delays and cost cutting.”

Tim Vance, EY-Parthenon UK&I Turnaround and Restructuring Partner in Yorkshire, said: “Profit warnings from industrial FTSE sectors rose by 40 per cent year-on-year across the UK, so it’s unsurprising to see that Yorkshire-based businesses operating in those sectors faced significant challenges in the second quarter of the year.

"A slowdown in the housing market, driven by rising interest rates, appears to have had a particular impact on demand for construction and related services.

“The volume of profit warnings issued in the region remains high and Yorkshire recorded the third highest volume of warnings across all UK regions in the second quarter.

"However, as is the case nationally, the pace and timing with which inflation falls will play a significant role in determining economic prospects and the extent of business challenges for the remainder of 2023.

"Given the ongoing headwinds facing businesses, it is imperative they continue to prioritise scenario planning and cash flow, with the UK’s economic outlook remaining uncertain.”

Warnings from all UK-listed companies rose year-on-year for the seventh consecutive quarter, which is the longest run of consecutive quarterly increases since 2008, EY said.

The highest number of second quarter warnings recorded by EY-Parthenon was in 2020, when 166 were issued.

Changing credit conditions were cited in one-in-five (20 per cent) of profit warnings during the quarter, the highest proportion since the second quarter of 2008 and up from one-in-ten (9 per cent) in Q1 2022.

Jo Robinson, EY-Parthenon Partner and UK&I Turnaround and Restructuring Strategy Leader, commented: “The sustained rise in profit warnings over the last two years reflects the extraordinary mix of challenges faced by UK businesses over that timeframe. It’s now clear that the effects of these low-growth conditions are spreading to nearly all corners of the UK economy, and this quarter we’ve seen earnings pressure extend up the value chain into the mid-market.”