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Profit warnings rocket for leading North East businesses, shows EY report

A total of 14 profit warnings were issued by listed businesses across the Yorkshire and North East regions in the third quarter of 2017, up from five in Q2 and eight in the same period last year, according to EY’s latest Profit Warnings report.

Nine of the profit warnings were from companies listed on AIM, with five on the main market.

The increase reflects the national trend that exposes a growing divergence between those sectors of the UK economy more exposed to domestic pressures and those benefiting from growth in overseas markets.

The FTSE sectors issuing the most profit warnings in Q3 2017 were: Support Services (13), General Retailers (8), Software & Computer Services (5), and Travel & Leisure (5).

Across the UK, quoted companies issued 75 warnings in Q3 2017 – a 67% increase on the previous quarter (45) and significantly above the average levels of warnings (62) for a third quarter – taking the total for the year so far to 195.

The increase from the seven year low recorded in the previous quarter reflects the unpredictable economic climate, according to EY’s latest Profit Warnings report.

Hunter Kelly, EY’s head of restructuring for Yorkshire and the North East, said: “Summer brought more mixed fortunes for listed businesses across Yorkshire and the North East with the contrast between growth from overseas markets and the slowing UK economy increasing.

“Many businesses besieged by pricing pressures before Brexit, are also now feeling the effects of rising domestic uncertainty and rising costs.

“A rise in multiple warnings reflects the difficulties in predicting what the trends are in such an uncertain economic climate, for example, will the Bank of England raise interest rates?”

“The warnings were due to a number of reasons from contract delays to pricing and cost pressures to lower demand from UK consumers.”

He added: “Not all companies in the same sector have faced the same issues, which highlights the difficulties in determining whether there is an overall trend.”