Profit warnings in Yorkshire and North East hit 11 year low for third quarter

Profit warnings issued by PLCs in Yorkshire and the North East fell to an 11 and a half year low in the third quarter of 2014, as the region’s listed companies bucked a nationwide increase.

According to EY’s latest Profit Warnings report, there were only three warnings in Yorkshire and the North East in Q3 2014, compared with 11 in the region in the previous quarter and four in the corresponding period last year.

The figure matched the record for the fewest profit warnings recorded in a single quarter in the region, set in Q1 2002 and equalled in Q1 2003.

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In contrast, there were 69 profit warnings across the UK, the highest third quarter total since 2008 and 13 more than the same period last year.

Hunter Kelly, restructuring partner at EY in Yorkshire and the North East, said: “It is difficult to read too much into this quarterly performance but it may suggest that Yorkshire and North East-based PLCs are beginning to read the shape of this recovery and forecast profits better than the rest of the country. Many businesses are becoming more operationally agile and focusing on working capital to respond to opportunities and challenges in the more competitive environment.”

He added: “However, before we get too complacent, the total profit warnings in the region for the first three quarters of 2014 still exceeded those for the corresponding periods in 2013 and 2012. Businesses in Yorkshire and the North East must maintain focus on adapting to the rapid changes created in the economy.

“Slower global growth – particularly in Europe, low inflation, low wage growth and low interest rates are likely to be around for some time and some sectors will also see rapid structural change. One only has to look to the supermarket sector for an obvious example.

“In short, some companies are finding it tough to grow sales and margins, and predict the direction the economy will take.”