Warning Signs

Profit warnings from manufacturing and financial services companies are on the rise, as part of a trend that has seen alerts broaden out from consumer businesses, shows this report from EY. This is in part due to growing investor Brexit anxiety, but also wider domestic and international forces.

Key findings include:

• Q1 2019 saw the highest number of profit warnings since 2009 with a total of 89, up by 22 percent year-on-year.
• The EY Profit Warning Stress Index was up by four points – the highest it has been in 10 years – as warnings spread into financial and manufacturing sectors.
• Rising disposable incomes cannot totally offset growing structural challenges, with 34 percent of FTSE general retailers issuing warnings in the last 12 months.
• Post-warning share price falls are still comparable to the height of the financial crisis, as the median share price took a hit of 17.6 percent.
• Brexit is just one factor denting confidence, with 10 percent of warnings being Brexit related, as global geopolitical and growth concerns multiply.