Profit warnings down but firms still face big challenges - report

The number of profit warnings issued by West Midlands-based listed companies decreased by 79 per cent in 2021 compared to the previous year.

However, supply chain disruptions and rising costs are set to continue to challenge businesses in the region, according to EY-Parthenon 's latest Profit Warnings report.

West Midlands listed businesses issued eight profit warnings in 2021, compared to 38 in 2020, with Q4 also seeing a 25 per cent decrease in the number of profit warnings issued compared to the same quarter in 2020.

Dan Hurd (pictured), EY Parthenon UK&I Turnaround and Restructuring in the Midlands, said: “Sporadic growth made it a difficult year for many companies to navigate, despite healthy headline figures.

“By the second half of the year, an increasing number of companies nationwide were issuing profit warnings as forecasting and earnings challenges evolved and multiplied.

“After a challenging time in 2020, there was a significant reduction in the number of profit warnings issued by listed businesses in the West Midlands during 2021.

“Despite this reduction, businesses operating in the West Midlands ' most prevalent sectors, such as manufacturing, have found the last two years particularly challenging thanks to operational disruptions caused by the global pandemic and Brexit.

“Retailers and the construction sector also struggled during this period and businesses will continue to face uncertainty, due to ongoing supply chain issues and potential skills shortages.

“Businesses may choose to continue to delay and alter their investment decisions and preserve cash. They could also look again at internal structures and further business transformation projects. ”