Profit warnings at highest level since dot

Profit warnings among the UK‘s listed companies are running at the highest level since the dot-com crash, adding to growing fears that the economy is weakening. Research has revealed that in the first half of 2007, 191 profit warnings were issued by UK-quoted companies, 13 per cent up on the first half of 2006, which saw 169 profit warnings.

 

Shortfalls in sales was blamed for the warnings by 43 per cent of the companies, while 22 per cent said that “difficult trading conditions” were to blame. A further 17 per cent gave “delayed or discontinued contracts” as their primary reason for failing to meet market expectations. Even though it is a far cry from the start of the 2001 economic climate which saw more than 230 profit warnings, the 191 profit warnings are a reminder that segments of UK plc are struggling. Expectations that interest rates will remain elevated for some time have added weight to a plethora of warnings against casual lending tendencies and complex debt instruments.

 

The highest warning sectors were software and computer services with 17, support services with 12, and general retail 10. The high-street sector had double the number this quarter, compared to the second quarter of 2006.

 

Martin Huckle