Profit warning figures improve

Profit warnings hit a six-year low in the UK for Q3 2009. there were 52 profit warnings form quoted UK companies during the period, a drop of 53% on the previous year and 15% lower than the last quarter, according to Ernst & Young's survey.

E&Y partner Keith McGregor said the improvement was due to the already depressed market and withdrawn company guidance, and an improving economic outlook, but warned against complacency.

"The one-off effects of monetary and fiscal stimulus and inventory rebuilding have put a gloss on current demand that could soon tarnish once this support is withdrawn."

"The ability of the economy to transition smoothly from this temporary boost to self-sustaining growth is still in serious doubt given the strong headwinds from still tight credit and the ongoing effects of balance sheet restructurings in both the private and public sector. Relapses are still possible, a slow recovery probable. The worst of the downturn may be behind us, but that does not mean all the risks to UK plc are too."

Another wave of restructurings could occur over the next couple of quarters as companies produce year-long depressed figures, which could push banking covenants to breaking point, McGregor added.