UK profit warnings fall as eurozone fears ease

The 16 warnings in March was a nine-year low for the month and followed 57 profit alerts in January and February when global uncertainty resulted in delayed or discontinued contracts, a report from accountants at Ernst & Young said.

Out of the 73 warnings issued in the first quarter, which was down two on the same quarter a year ago, 33 per cent were by food and drug retailers and 16 per cent in personal goods.

E&Y partner Keith McGregor said liquidity injections by the European Central Bank and a settlement on Greek debt radically eased eurozone concerns.

However, he warned the impact of the extra Jubilee Bank Holiday and the Olympics would make it harder for many businesses to forecast trading.

He added: “Consumer-facing companies in particular will find it difficult to judge demand with extra shopping hours perhaps tempered by lulls in footfall during major events and increased operating costs.”

Given this backdrop, Mr McGregor said many companies were already playing down prospects for 2012 or limiting the extent of their forecasts.

The highest profile warning of the quarter came from supermarket Tesco after poor Christmas trading in the UK caused it to downgrade City forecasts in its first profits warning in two decades.

In Yorkshire and the North East, the number of profit warnings issued by listed companies has stabilised after a dramatic hike at the end of 2011. Seven profit warnings were recorded in the first three months of 2012 in Yorkshire and the North East, representing a drop of 46 per cent on the previous quarter.

Charles King, restructuring director at Ernst & Young in Leeds, said: “2011 was a rollercoaster ride for listed businesses in Yorkshire and the North East.

“Over the last 12 months profit warnings in the region have spiked and dipped quarter on quarter, amidst great economic uncertainty, combined with heightening tensions across the eurozone.”

Sectors issuing profit warnings in the region included mining, support services, industrial engineering, health care equipment and services and electronic and electrical equipment.