Second quarter profit warnings fizzle out as confidence picks up

 
Michael Bow
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High street fashion brand French Connection issued a profit warning in April
UK PROFIT warnings fell to a near two-year low last quarter after May’s decisive general election result spurred better earnings for corporates, figures out today show.

FTSE-listed companies issued 57 profit warnings between the start of April and the end of June – down 26 per cent on the prior quarter.

Profit warnings hit a six-year high at the end of last year, underscoring the impact volatile currency moves have on UK corporate earnings.

With just four per cent of listed companies warning shareholders of lower-than-expected profits, the quarter is the best period for profit warnings since the third quarter of 2013, said EY, publisher of the stats.

“This period was a quarter of two halves. In April, UK profit warnings again hit a seven-year high; however, in May an improving global economic outlook and an unexpectedly decisive General Election result appeared to set the ball rolling on many contracts and investment decisions,” EY’s Alan Hudson said. April saw shares hit in firms such as French Connection, which forecast lower earnings.

The software and computer services sector has been the most prolific issuer of profit warnings this year, issuing 17 in total. General retailers issued five profit warnings in the quarter, taking their total for the year to 11 – the highest for four years.

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