UK Profit Warnings Q2 2017
As good as it gets?
Low levels of profit warnings in Q2 mask challenging outlook for UK businesses
UK quoted companies issued 45 warnings in Q2 2017, 40% lower than in Q1, almost a third lower than Q2 2016, and well below the post-crisis second-quarter average of 58.
Key profit warning highlights
- UK quoted companies issued 45 warnings in Q2 2017, the lowest quarterly total since Q2 2010
- At the same time, warnings from retailers equalled the highest second quarter total since 2011
- High levels of warnings from retailers and business-to-business sectors hint at tougher times ahead
A stronger than expected global economic backdrop and falling forecasts have combined to significantly lower warnings, according to the report. A fifth of warnings cite internal operational problems, with external factors, such as exchange rates and price pressures, slipping down the list as earnings expectations adjust.
The FTSE sectors issuing the most profit warnings in Q2 were:
- General Retailers (7)
- Software and Computer Services (6)
- Support Services (6)
- Travel and Leisure (4).
With concerns rising over business confidence and delayed decision making, it’s notable that a fifth of warnings cited contract delays or cancellations in Q2, with these warnings primarily focused in FTSE Support Services and FTSE Software and Computer Services sectors. Contract issues also loom large in the FTSE Construction and Materials sector. Risk has largely been transferred to contractors and more trying industry conditions are exposing problem contracts.
Download Profit Warnings Q2 2017 943K, July 2017