Profit warnings rise to highest rate since during credit crunch

Ben Southwood
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LISTED UK firms issued more profit warnings in 2012 than at any point since the height of the financial crisis, according to data out yesterday.

Firms listed on the main and junior markets issued 86 profit warnings between them in the final three months of the year, Ernst & Young said, up 26 per cent compared to the third quarter.

This brought the 2012 total to 287 – the highest figure since 2008 saw the world economy hit by the worst crunch for decades.

In total, some 15 per cent of UK firms quoted on one of the main or alternative exchanges issued profit warnings last year, again the highest since 2008, when 18 per cent of firms were forced to issue warnings.

“Profit expectations dropped sharply in 2012 as economic forecasts fell and escalating risks in key global economies unnerved businesses, leading to delayed investment and purchasing decisions,” explained Ernst & Young’s Keith McGregor.

“The UK economy lacked the strength to gather momentum against this difficult global backdrop and finished 2012 with nothing more than a low growth landscape on the horizon.”

Business services firms issued the most warnings – FTSE support services companies issued 46 warnings between them over the year, while FTSE software & computer services issued 24. But industry was also hit – close to two-fifths of FTSE-listed industrial transport firms had to issue a warning in 2012.

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