Number of Yorkshire firms reporting distress rises by level higher than financial crash, with retail and leisure hit hardest

The number of warnings issued by Yorkshire-based listed companies increased significantly to 43 in 2020 compared with 24 in 2019, a 79 per cent increase.

The analysis is published in EY’s latest Profit Warnings report and shows the number of companies in distress in the region to be significantly higher than at the peak of the financial crisis in 2008, when 19 warnings were recorded.

Warnings were heavily weighted to the first quarter of the year, when the pandemic began to impact on the economy – 26 of the profit warnings were issued in this quarter.

Hunter Kelly, inset, EY-Parthenon Turnaround and Restructuring Strategy Partner in Yorkshire, said: “The majority of Yorkshire businesses issuing profit warnings last year did so in the first quarter, and 81 per cent of all profit warnings issued during the year cited Covid-19 as a factor, many in the wake of the initial shock of the first lockdown in March.

“Since then, bricks and mortar retailers and certain leisure business continue to be severely impacted, but profit warning levels fell as the year progressed. This reflects management teams being cautious with their forecasting, as well as the help available from government support initiatives being extended.

“Many businesses have been reliant upon government for a number of months. While there is speculation these measures could be extended until the summer, the countdown has started, and in weeks or months we’ll find out how many companies have the headroom and business model to stay afloat.”

The number of UK listed companies at risk of insolvency has doubled during 2020.