Profit warnings hit seven-year high

The latest research by
Ernst
& Young reveals UK listed companies are battered by turbulent conditions
as profit warnings for the second quarter of 2008 hit 98 – the highest second
quarter figure since 2001 and up 11% on Q2 2007.

E&Y says at least another 15 companies stopped short of issuing a full
profit warning, stating they would need to lower expectations if conditions did
not improve.

The number of companies with turnover over £1bn who issued profit warnings in
Q2-08 doubled on Q2-07, half of them blaming the credit crunch compared with
about one in five in the total companies surveyed.

‘After a pivotal quarter, it is clear that the ripples from the credit crunch
have spread far beyond the financial sphere,’ Keith McGregor, Ernst & Young
restructuring partner, said. ‘Most of the 26% of companies warning this quarter
blaming the credit crunch for their woes came from outside the financial sector.

Further reading:

July/August: Corporate profits dip, but there’s still hope
for M&As