Abu Dhabi, UAETuesday 18 February 2020

UK profit warnings hit four-year high in 2019

Changing consumer habits mean firms affected by discretionary spend were hardest hit

People on a bridge with a view of the city of London behind them. Profit warnings by UK firms hit a four-year high in 2019 as businesses dependent on discretionary consumer spending - such as retail, leisure and travel - took a hit. EPA
People on a bridge with a view of the city of London behind them. Profit warnings by UK firms hit a four-year high in 2019 as businesses dependent on discretionary consumer spending - such as retail, leisure and travel - took a hit. EPA

Changing consumption habits caused by new technology contributed to more British companies warning they were falling short of profit forecasts last year than at any time since 2015, according to a report by consultants EY.

British firms issued 313 profit warnings in 2019, with consumer discretionary businesses — including retail and travel and leisure — industrial support services, software services and construction and materials hit the hardest.

The number of listed companies warning in 2019 was also the highest in 18 years, marginally above the figure of 2008, the report showed.

“The UK economy isn’t in recession,” Alan Hudson, head of EY’s UK and Ireland restructuring division, said in the report. “But we could argue that several sectors are, due to rapid structural changes that are amplifying economic stresses.”

While last year proved to be tough for many industries, 2020 might bring a silver lining, he added.

“The easing of domestic political tension, combined with additional fiscal spending, should boost earnings, helping more companies to meet depressed earnings expectations,” according to Hudson.

Updated: January 19, 2020 08:56 AM

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