Yorkshire and North East profit warnings fall in Q2

The number of profit warnings issued by quoted companies in Yorkshire and the North East fell to just four in the second quarter of 2015, compared with 11 in Q2 2014, according to EY’s latest Profit Warnings report.

The Q2 2015 total for the region was also down on the six warnings recorded in Q1 2015 and represented the lowest quarterly volume since Q3 2014, when listed companies in Yorkshire and the North East issued three warnings.

This mirrored the country as UK profit warnings fell to a near two year low in Q2 2015, with UK quoted companies issuing just 57 warnings – six fewer than the same period of 2014 and a drop of 26 per cent compared to the previous quarter.

Hunter Kelly, restructuring partner at EY in Yorkshire and the North East, said: “These results for Yorkshire and the North East suggest that PLCs continued their stable start to the year in Q2. We’ve now had four consecutive quarters where profit warnings in the region have been relatively low.

“An improving global economic outlook and a decisive General Election result in May appeared to set the ball rolling on contracts and investment decisions. This helped companies meet their lower forecasts.

“Even though these results are positive, planning and forecasting remains challenging for companies, with margins still under pressure, whether you are a supplier to customers in sectors ranging from oil and gas to food. Even with improving economic conditions, there are enduring issues dragging on profits.

“Rising competition, and disruptive new entrants and trends – combined with overcapacity and ‘noflation’ – provide tough conditions in which to raise prices and forecast. Companies in Yorkshire and the North East need to continue to focus on operational and capital resilience to thrive, and meet rising investor expectations in this volatile environment.”

Hunter Kelly said: “This year has seen stronger growth and rising deal activity, but heightened monetary policy speculation and the Eurozone’s growing existential crisis have increased uncertainty and cloud the market outlook for the second half of 2015.

“For UK earnings the macro environment is only part of the story. Many companies are contending with dizzying change within their own sectors, as disruptive entrants and technologies continue to challenge pricing and old models. Change brings opportunity, but only for those resilient enough to take advantage.”

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