Region sees profit warnings at their highest since 2006

Economic uncertainty and spending cutbacks from both businesses and consumers led to 12 warnings from quoted companies in the last three months of 2011. This is double the number from the third quarter and the same period in 2010.

Yorkshire plcs issued 33 profit warnings during 2011 – more than twice the number of 2010 – which represents the worst regional figure outside London and the South East.

Hunter Kelly, restructuring partner at Big Four firm Ernst & Young in Leeds, said: “These results show just how tough 2011 was for many companies and this year is likely to continue in the same vein with the gap between the strong and the weak widening.

“Many businesses are still expanding profitably, but others remain moribund by debt or defunct business models, unable to build value or gain momentum in these challenging economic conditions.

“Creditor patience cannot last forever and as growth becomes increasingly elusive, we expect further rounds of restructuring in the year ahead.”

Unsurprisingly, those companies directly exposed to the cash-strapped UK consumer issued the greatest number of profit warnings during 2011.

The gloom on the high street contributed to 39 profit warnings from general retailers in 2011, more than the whole of 2009 and 2010 combined.

During the last quarter of 2011, a record 18 per cent of the listed companies who work in the retail sector put a warning out.

These included Mothercare, Mr Kipling cakes manufacturer Premier Foods and Blacks Leisure.

But many other retailers defied the doom and gloom, a discrepancy explained by Mr Kelly.

“Although consumer-facing sectors have been hit hard by the eight per cent fall in disposable income, the key here is more to do with business models and cost structures,” he said.

IT services and support services also suffered the knock-on effects of the public sector and businesses cutting back, with both sectors seeing 12 warnings each during the quarter at a national level.

Software and computer services companies alone issued 31 profit warnings throughout 2011, 40 per cent more than the year before.

According to the report, pressure on firms’ incomes is likely to remain intense during 2012 due to threats such as the eurozone crisis, slower growth in China and a potential fall back in US demand.

Yorkshire’s profit warnings last quarter came from a broad range of sectors including retail, media, support services, travel and leisure, financial services, personal goods, chemicals and forestry and paper.

bernard.ginns@ypn.co.uk