BusinessCorporate FinanceProfit warnings down 10% for 2006

Profit warnings down 10% for 2006

E&Y research reveals fewer troubled companies

A total of 342
profit
warnings
were issued by listed companies in the UK in 2006, compared with
381 in 2005, according to research released by
Ernst & Young.
This represented a year-on-year drop of 10%.

Research for the fourth quarter of 2006, revealed that there were 88 profit
warnings, 8% down on the fourth quarter of 2005 but an increase of 3.5% from
quarter three of 2006.

The most common reason for a profit warning was a ‘shortfall in sales’ (42%),
while 27% of companies cited ‘difficult trading conditions’ and 19% gave
‘delayed or discontinued contracts’ as their primary reason for a warning.

In 2006, 75% of companies issuing profit warnings had a turnover of under
£200m, compared with 70% in 2005 and 67% in 2004.

Further reading:

Big drop in quarter-on-quarter profit warnings

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