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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