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Increased number of profit warnings issued in last year; 17 declarations made by listed west midlands firms in 2017.

Byline: JAMES RODGER Content Writer

LISTED companies in the West Midlands issued an increased number of profit warnings during 2017, new research reveals.

A total of 17 profit warnings were declared to the market last year, up from 12 in 2016, according to the latest Profit Warnings report published by EY.

The final quarter alone saw eight profit warnings issue, compared to five in the previous quarter and three in the same quarter of 2016.

The West Midlands followed the national trend which saw 81 profit warnings in Q4 2017, up from 75 in Q3 and 11 per cent higher than the same quarter of 2016.

Companies issue profit are now scrutiny and are reacting less Dan However, the total number of profit warnings in 2017 (276) was comparable with 2016 when 283 warnings were issued. EY's report said 2017 was a year of two halves, with both the number of profit warnings and investor reaction increasing significantly in the final two quarters.

Dan Hurd, head of EY's Midlands restructuring team, said: "An increase in restructurings and profit warnings reflects the pressure building across a significant portion of the Midlands economy.

"Companies that issue profit warnings are now under greater scrutiny and investors are reacting with less patience, especially in sectors where shareholders view warnings as a sign of deeper issues rather than a one-off event.

"In 2018, inflationary pressures may ease but new challenges are emerging and some existing concerns, most notably Brexit, will come to a head.

"There are still many opportunities to capture growth but the cumulative impact of rising costs, slowing growth and increasing competition will continue to expose weaknesses in any company struggling to get a handle on this changing economy."

According to the report, 30 per cent of all UK profit warnings in 2017 cited cost and competitive pressures, compared to 16 per cent in 2016.

Contract uncertainties also continued in 2017, with 25 per cent of companies citing delays or cancellations, including 40 per cent of warnings from the FTSE support sector and 60 per cent from FTSE software & computer services.

that warnings greater investors with patience.

FTSE support services companies issued 42 UK profit warnings in 2017, ten fewer than 2016, with the increase in oil price helping industrial suppliers.

Hurd But, from companies in business support services, including outsourcers and contractors, pricing pressures continue to build exposing problem contracts and failures in internal controls.

Mr Hurd added: "The support services sector will remain in the spotlight in 2018, with public sector contracts in particular under scrutiny. "Slower UK growth may also limit private sector demand, with activity in the construction sector already slowing.

"But there is still the potential for companies with strong balance sheets and operational infrastructure to make the most of innovation and expand their business in 2018."

of 2016. followed which saw in Q4 Q3 warnings 2017 was a Contract uncertainties in 2017, with 25 citing including warnings support per fewer the helping But, from companies Companies that issue profit warnings are now under greater scrutiny and investors are reacting with less patience. Dan Hurd

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Publication:Coventry Evening Telegraph (England)
Date:Feb 2, 2018
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