Ernst and Young: expect a jump in profit warnings

Tim Wallace
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PROFIT warnings soared in the final quarter of 2011, with Ernst and Young claiming yesterday that the growing gap between “star performers” and “zombie” companies points to more this year.

The three-month period saw a 70 per cent jump in warnings – the highest quarterly rise since early 2001.

Quoted companies issued 88 profit warnings last quarter, up 51 on the previous three-month period.

Those 88 took 2011’s total to 278, compared with 196 in 2010.

Companies in the general retail sector were worst hit, issuing 39 warnings last year – more than the whole of 2009 and 2010 combined.

Ernst and Young believes the weak economic outlook means the trend will continue into this year – firms like Tesco have already issued profit warnings this month.