Recent findings from EY-Parthenon reveal that UK-listed companies have issued a record number of profit warnings, reaching a two-year peak between July and September with 84 alerts. This marks an 11 percent increase compared to the same period last year.

The report indicates that nearly 19.2 percent of UK-listed firms issued a profit warning over the past year, the highest rolling percentage since the onset of the Covid pandemic.

Among the reasons cited for these warnings, 38 percent of companies reported contract and order cancellations or delays as key factors. Additionally, lower sales were responsible for 33 percent of the notifications, highlighting significant challenges in maintaining revenue streams.

Jo Robinson, leader of turnaround and restructuring strategy at EY-Parthenon, pointed out, “This uncertainty intensified over the summer, as firms anticipated the new chancellor’s autumn budget and faced ongoing geopolitical tensions.

“The latest data on profit warnings serves as a real-time reflection of the changing business sentiment and its repercussions on earnings,” she added.

Robinson noted the importance of addressing these emerging issues promptly, suggesting that whether this increase in profit warnings is a short-term fluctuation or a sign of a longer trend remains to be seen.

The sectors most impacted during the third quarter included industrials and technology, with businesses in industrial support services and technology hardware facing the highest number of warnings.

In the industrial support services sector—comprising business service providers, industrial suppliers, and recruitment firms—ten profit warnings were recorded, primarily due to delays and cancellations of contracts.

Moreover, customer hesitance to place new orders was particularly pronounced in this sector, where over 90 percent of the warnings were attributed to order slowdowns or cancellations.

Other sectors reporting significant challenges included software and computer services, with seven profit warnings logged; while media, travel and leisure, as well as investment banking and brokerage sectors each reported five warnings.