UK quoted companies issued 76 profit warnings during the first three months of this year – down from 77 in Q1 2015, and 24 fewer than Q4 2015. However, according to EY restructuring experts, this is remarkably high given the substantial downgrade in profit expectations at the end of 2015. In the twelve months to the end of Q1, 17.2% issued profit warnings, compared with 16.5% at the same point in 2015.
The report goes on to highlight weak oil prices as denting expectations although “2016’s volatile start created uncertain and difficult conditions for companies reliant on the contract cycle”.
Apparently, central bank action have soothed market concerns but “companies are clearly still coming to terms with the intense competition caused by overcapacity and disruption across many sectors”.
Other key findings were as follows:
FTSE sectors leading profit warnings
•Support Services (9)
•General Retailers (8)
FTSE sectors with the highest percentage of companies warning
•Services & Distribution (50%)
•Mobile Telecommunications (50%)
•Electronic & Electrical Equipment (50%)