Number of profit warnings issued by Yorkshire firms rises 10 per cent in 2023

Yorkshire companies operating in industrial FTSE sectors issued the region’s highest volume of warnings across 2023, with a total of 10, while companies within the consumer discretionary sector saw seven warnings. The healthcare sector also saw six warings.

Tim Vance, EY-Parthenon UK&I turnaround and restructuring partner in Yorkshire, said: “Overall, 2023 proved to be a challenging year for companies across the UK, and this was no different in Yorkshire.

“The annual increase in warnings from listed companies in the region underscores the significant headwinds that have continued to face many businesses across Yorkshire, with companies in the industrial and consumer discretionary sectors most affected – similar to the national trend - largely as a result of increased costs and falling consumer confidence. Meanwhile, only the South East saw more warnings issued in healthcare sectors last year, highlighting another key challenge for the region.

“However, there are reasons for optimism going forward. Profit warnings in the fourth quarter of 2023 fell in the region, both year-on-year and quarter-on-quarter, a testament to the resilience of Yorkshire businesses. Companies will need to prioritise cash flow and ensure they are forward planning, particularly as the economy is still experiencing stagnation. However, with inflation and interest rates both expected to fall at pace this year, there could be brighter growth prospects ahead.”

Across the UK, the percentage of listed companies issuing profit warnings last year exceeded the levels seen at the peak of the financial crisis in 2008 with 18.2 per cent of firms issuing warnings.

In total, 294 profit warnings were issued in 2023, a small decrease of 11 from 2022 when 305 warnings were issued.

However, the percentage of companies warning was still exceptionally high at 18.2 per cent, higher than 17.7 per cent at the peak of the global financial crisis in 2008. Last year, over a quarter of warnings were attributed to delayed contracts or decisions. 19 per cent were due to increased costs and a further 19 per cent cited the impact of higher interest rates.

In the fourth quarter of 2023, 77 warnings were issued, versus 76 in the prior quarter. Cost pressures appeared to ease towards the end of 2023, causing just 10 per cent of warnings in in the fourth quarter, compared to 41 per cent in the same period the year before.

Corporate spending delays and higher interest rates became an increasing issue in 2023, with the latter prompting 24 per cent of profit warnings in the second half of 2023, compared with 14 per cent in the first half of the year.