Profit warnings issued by Yorkshire’s listed companies more than doubled year-on-year in 2022

The retail sector issued the most profit warnings in Yorkshire in 2022 with six, which the report said reflected lower consumer confidence as inflationary pressures and the cost-of-living crisis worsened.

FTSE renewable energy and FTSE general industrials companies in the region also faced challenges, with four warnings from each sector during the year.

The report found that figures were consistent throughout the second half of the year, with nine warnings issued in Yorkshire in both Q3 (the third quarter) and Q4 (the fourth quarter) 2022.

Tim Vance, EY-Parthenon UK&I turnaround and restructuring partner in Yorkshire, said: “2022 presented businesses with a range of significant challenges, with rising operational costs, falling consumer confidence and the cost-of-living crisis all having a notable impact.

“As was the case across the rest of the UK, FTSE retailers in the region issued more profit warnings than companies from any other sector. This is hardly surprising given The Office for National Statistics (ONS) reported that 2022 saw the biggest decline in retail sales since records began in 1997, while inflation was at its highest levels for 40 years.

“Businesses operating in the industrials sectors were also under pressure from increasing costs, supply chain issues and foreign currency volatility. More profit warnings came from industrial sectors than any other industry grouping in 2022. .

“Continuing headwinds are likely to present further challenges in 2023, with the EY ITEM Club Winter Forecast predicting a deeper recession than first anticipated. With accessing capital likely to become increasingly difficult, it is critical that businesses build an understanding of how they can adapt and thrive through challenging and volatile conditions.”

Across the UK, the number of profit warnings issued by UK-listed companies in 2022 increased by 50 per cent year-on-year, with record levels of warnings citing rising costs.

In total, 305 profit warnings were issued in 2022, an increase of 102 from 2021 when 203 warnings were issued. Half (152) of the warnings issued in 2022 were due to rising costs, double the share in 2021. During the year, 17.7 per cent of the UK’s 1,193 listed businesses issued a profit warning, equal to the proportion of companies that issued warnings during the global financial crisis in 2008.

Sam Woodward, turnaround and restructuring strategy partner at EY, commented: “Although festive trading was better than expected for many businesses, the bar was set low by exceptional levels of consumer sector profit warnings in 2022. The ‘golden quarter’, a vital period for consumer companies, included a winter World Cup along with the disruption from train and postal strikes. This backdrop created a further complex layer of challenges and opportunities in addition to ongoing cost, labour, inventory, and confidence issues for consumer-facing companies. Supermarkets appear to have been the main winners of Christmas 2022, while many omnichannel retailers managed to flex their offering to adapt to the impact of industrial action and performed well.