The number of profit warnings issued by British companies jumped to 75 in the third quarter, the biggest quarterly rise in almost six years as economic pressures weighed on retailers and support service companies, business services group EY has said writes Paul Sandle, Andy Bruce and Elizabeth Piper.
The spike came straight after one of the biggest falls recorded in the previous quarter, when there were 45 warnings, and is significantly ahead of the average of 62 in the third quarter, EY said yesterday.
“Summer brought more mixed fortunes for UK plcs with the contrast between accelerating overseas markets and the slowing UK economy increasing,” said EY’s head of restructuring Alan Hudson. “Many businesses besieged by pricing pressures before Brexit are also now feeling the brunt of rising domestic uncertainty and rising costs.”
Retailer Dixons Carphone and construction and support service firm Carillion were two of the biggest companies to warn in the period.
The warnings have showed no sign of slowing in October, with park operator Merlin Entertainments, engineer GKN, workspace group IWG and another support services company, Interserve, all downgrading forecasts. Reports suggest GKN is considering splitting into two listed companies comprising its aerospace and auto component divisions.
The company, which supplies components for Airbus and Boeing planes and carmakers, including Volkswagen and Fiat Chrysler, is in the early stages of considering the plan, reports in the British media suggested.
Meanwhile, Britain can only come up with a figure for a financial settlement with the EU when Brexit has been agreed, the country’s trade minister Liam Fox said yesterday, warning leaders not to believe London is bluffing over a no deal.
Mr Fox said Britain would offer the other 27 EU members “further assurance” on its divorce before the next summit in December to unlock the talks to make way for a discussion of future trade ties. “I don’t know what that number is but it’s very clear that we could only have that final number as part of a final agreement, we would want to know what the end state is.”
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