Profit warnings hit near two-year high as costs bite – Daily Business

Housebuilders have issued more warnings than in the 2008 crisis (pic: DB Media Services)

Profit warnings issued by businesses quoted on the London Stock Exchange reached a near two-year high in the recent quarter as they continue to come under pressure from rising costs.

The research from advisory firm EY shows that 65 public firms issued downgrades in the three months to the end of September, compared with 59 during the previous quarter.

It marks the highest figure since the final three months of 2024, when 71 warnings were released and comes ahead of the first Budget to be delivered by John Healey.

The Chancellor’s focus is expected to include further measures to help smaller companies in the private sector, such as pubs and restaurants. This could include a rise in the threshold at which small firms start paying business rates from £12,000 to £18,000.

Among those in the quoted sector, housebuilders have already issued more warnings this year than during the 2008 financial crisis. 

Geopolitical instability and policy shifts were identified as the primary drivers of profit warnings, featured in 54% of cases over the third quarter, while 38% cited the fallout from the ongoing conflict in the Middle East.

More than a third of warnings, 35%, referenced rising costs as a leading factor, pointing towards inflationary pressures and higher business costs.

Almost a fifth of quoted companies, 17%, have issued at least one profit warning over the past 12 months.

Jo Robinson, EY-Parthenon partner and UK&I financial restructuring leader, said: “The latest figures show the variety of structural changes and challenges that companies are currently navigating.

“This is not a conventional economic cycle. For much of the post-war period, the economy followed a familiar demand-led boom-and-bust pattern but, since the pandemic, supply-side disruption including material and labour shortages, energy shocks, tariffs and wider geopolitical disruption has become far more significant.”

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