North West listed companies issue highest number of Q3 profit warnings in 24 years

 Listed companies in the North West issued 11 profit warnings between July and September 2024, the region’s highest Q3 total since 2000
 However, this comes off the back of a resilient first half of the year for the North West business community
 Warnings in the region almost doubled year-on-year, up from six in Q3 2023
 Profit warnings in the North West were spread across a variety of industries and sectors, highlighting the challenges facing a range of different businesses
 Nationally, UK-listed companies issued 84 profit warnings during Q3 2024, the highest quarterly total in two years

North West, 11 November 2024: UK-listed companies in the North West issued 11 profit warnings during Q3 2024, marking the region’s highest Q3 total since 2000, according to EY-Parthenon’s latest Profit Warnings report.

The volume of warnings issued by companies in the region almost doubled year-on-year, from six in Q3 2023. However, this follows a resilient first half of 2024, in which North West warnings were down 21% year-on-year.

EY-Parthenon’s latest data highlights the fact that a wide range of different businesses in the region are facing challenges, with Q3 warnings spread across a variety of sectors and industries.
National figures in Q3 followed a similar trajectory to the North West, with 84 profit warnings issued across the UK, representing an 11% year-on-year increase and the highest quarterly total in two years.

Nationally, the proportion of UK-listed companies that have issued a warning over the last year now stands at 19.2% – the highest rolling 12-month percentage since the pandemic and, before that, since 2001.

Leading factors behind Q3’s UK profit warnings included contract and order cancellations or delays, cited in 38% of warnings, the highest percentage for this reason in 15 years. Falling sales also triggered a third (33%) of the quarter’s warnings.

Sam Woodward, EY-Parthenon UK&I Turnaround and Restructuring Partner in the North West, said: “After an encouraging and resolute first half of 2024 for businesses in the North West, Q3 represented a more challenging period, with a total of 11 profit warnings issued by companies in the region – equalling the overall total seen across the first half of the year in the North West. The spread of warnings across a variety of sectors is consistent with what we’re seeing in the market and indicates that businesses in multiple industries are currently facing challenges.

“Business sentiment following the Autumn Budget announcement has been mixed, which suggests that further challenges could be ahead. Resilience, scenario planning and stress testing will be crucial throughout the remainder of the year and into 2025.”

Jo Robinson, EY-Parthenon Partner and UK&I Turnaround and Restructuring Strategy Leader, added: “Uncertainty has been a persistent feature of the business environment for several years now but, unusually, this latest surge in warnings wasn’t preceded by a sudden economic downturn or one-off event. This uncertainty seemed to intensify over the summer as companies awaited the new Chancellor’s Autumn Budget and were also affected by ongoing heightened geopolitical tensions. The latest profit warnings data gave us a real-time indicator of this shift in business sentiment and the impact this can have on company earnings.

“Time will tell whether this rise in profit warnings is a temporary spike or indicative of a longer-term trend, but against a volatile macroeconomic and policy backdrop, coupled with profound changes in technology and consumer behaviour, abrupt adjustments to earnings expectations appear increasingly likely.

“In this environment, companies and their stakeholders must be vigilant in proactively identifying and addressing emerging issues before they escalate. The restructuring landscape may be rapidly evolving, with innovation often offering opportunities for value preservation, but prompt action is still crucial to secure the best possible range of outcomes.”

Industrials and technology led the national rise in profit warnings
The FTSE sectors with the highest number of profit warnings across the UK in Q3 were Industrial Support Services – which encompasses business service providers, industrial suppliers and recruitment companies – with 10 warnings issued, and Technology Hardware & Equipment, with eight.

Customer reluctance to commit to new contracts and orders was particularly pronounced in the Industrial and Technology sectors, where over 90% and 70% of the warnings, respectively, were related to either lower orders or contract delays and cancellations.

A high number of warnings were also seen across FTSE Software and Computer Services (seven), Travel & Leisure, Investment Banking & Brokerage, and Media (all with five).