INSIGHTS
COMMUNITY ARTICLE
Warning Signs - An Analysis of Profit Warnings
The pace of profit warnings and share-price reaction have increased significantly since last summer, reflecting a more difficult domestic outlook. In this report EY considers the impact of rising costs, falling growth and increasing competition on companies struggling to get a handle on the changing economy
Key points include:
- The median share price reaction in Q4 2017 was the highest since the Brexit quarter of Q2 2016 and moved even higher in the first three weeks of 2018.
- Many companies are still struggling to adapt to the cumulative effects of economic and structural change.
- The UK may have hit the peak of inflation, but prices still look set to stay ahead of wages for most of 2018.
- EY expects 2018 to bring little respite in top-line, margin or cost pressures and no let-up in the pace or demand for structural change.
- Companies will need strong leadership to generate enough internal momentum and external support to overcome barriers.
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