Profit warnings issued by Yorkshire companies up 60% on same period last year

In line with the broader UK trend, consumer discretionary businesses in Yorkshire issued the joint-highest number of profit warnings (three) in quarter one. There were also three warnings from healthcare companies across the region.

Only London, the South East and the North West saw more warnings issued than Yorkshire in the first quarter of 2023.

Tim Vance, EY-Parthenon UK&I turnaround and restructuring partner in Yorkshire, said: “Despite edging down slightly quarter-on-quarter, the volume of profit warnings issued in Yorkshire remains high year-on-year.

"As has been the case across the UK, consumer-facing companies in the region have continued to face challenges from inflation, with consumers tightening their belts as the cost of living remains high.

"Whilst Yorkshire has seen a higher number of healthcare profit warnings than any other UK region in quarter one of 2023, the cases have been situation-specific rather than being reflective of sector trends.

“The economic outlook is starting to look more positive, with inflation forecast to fall later this year and consumer spending set to increase. However, businesses should look to prioritise forward planning and stress testing, placing a strong focus on cash with further challenges likely ahead later in 2023.”

UK-listed companies issued 75 profit warnings between January and March 2023, the highest first quarter total since the early stages of the pandemic in 2020

More than a third (35 per cent) of profit warnings cited delayed, reviewed, or cancelled contracts, up from 21 per cent in the same period in 2022, as customers paused or cut spending amid volatile and unreliable demand.

The report found that since the start of 2022, 98 companies have issued at least two profit warnings, while a significant cohort of UK companies have faced particularly challenging conditions after entering the three warning ‘danger zone’. Of the 31 companies that have issued three warnings since the start of 2022, 29 per cent have since delisted or are in the process of being sold. This marks a greater-than-average market dropout rate, as typically just one-in-five companies delist within a year of their third warning, most due to insolvency.

One-in-five (22 per cent) of quarter one profit warnings were issued by UK-listed companies in the technology and telecommunications sectors with warnings almost tripling year-on-year to 16 in total.

FTSE Software and Computer Services companies issued nine profit warnings in total, the sector’s highest level of warnings since Q2 2020, while warnings from telecoms sectors were the highest since 2018.