South East: Record profit warnings issued as COVID-19 bites
During the first three quarters of 2020, listed companies headquartered in the South East issued more than double the number of profit warnings compared to the same period last year, as the UK total hit an all-time high, according to the latest EY quarterly analysis of UK profit warnings.
Year-on-year the number of profit warnings in the first nine months of 2020 from companies in the South East increased by 137% from 43 to 102 warnings. In 2020, the overwhelming majority of profit warnings from listed companies in the South East (84%) have been attributed to COVID-19.
Richard Baker, managing partner at EY in the Thames Valley & South, said: “Most of the profit warnings from quoted companies in the South East has been attributed to COVID-19, demonstrating the very real impact the pandemic is having on our listed companies.”
Travel & Leisure and Industrial Support Services were responsible for 16 profit warnings each in the region, with Construction & Materials also responsible for eight.
“It is fair to say that Travel & Leisure is one of the sectors most affected by the COVID-19 pandemic. After coping with almost entirely shutting down overnight early in the pandemic, companies are now trying to navigate a new form of normality in the face of continuing social distancing measures. The sector is being challenged to think differently – whilst controlling cost – and businesses which adapt quickly will come out stronger in the long term,” added Baker.
The UK-wide perspective
After just nine months, the number of profit warnings issued by UK quoted companies has reached a new, annual high with more expected due to continued uncertainty from COVID-19, Brexit and the easing of government support.
The total number of profit warnings from UK businesses in 2020 at the end of Q3 was 524, setting a new record for the annual total. This figure replaces the 19-year-old record of 506 from 2001.
