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Profit warnings rise in second quarter, EY finds

UK quoted companies issued 66 profit warnings in the second quarter of 2016, nine more than in the same period last year and the highest second quarter total since 2008, Big Four accountants EY have said,

According to EY, there have been 321 warnings in the year to date from 17.4% of UK listed businesses, compared to 297 warnings in the same period in 2015.

Brexit was cited as reason for the profit warnings by seven companies – 11% of the total – with most referring to the impact of uncertainty on demand and the weaker pound. Slower global growth and the impact of digital disruption were named as the challenges most likely to trigger warnings.

The FTSE sectors leading profit warnings were: support services, travel and leisure, general retailers, and media.

These sectors – along with construction and real estate – face some of the strongest headwinds from Brexit uncertainty, EY said.

Source: EY

Source: EY

“Brexit’s impact on already low yields is a reminder that it can’t be viewed in isolation. Companies need to see the UK’s decision to leave the EU within the context of a broad range of disruptive events in the volatile, uncertain, complex and ambiguous world we described last quarter,” the report said.

“Most profit warnings in the second quarter and those in the four weeks since 23 June didn’t cite Brexit – and most that did named other issues.

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