Profit warnings hit 2008 level

Profit warnings: 2008 levels
Profit warnings: 2008 levels
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PROFIT warnings have soared to their highest level since the height of the financial crisis in 2008.

Figures published today by accountant Ernst & Young show Scotland’s quoted companies issued 16 profit warnings in 2012, ten more than the previous year.

Colin Dempster, head of restructuring at Ernst & Young in Scotland, said Scottish businesses were finding it tough and many will struggle in the year ahead. “Some companies continue to be outpaced by changes to technology and patterns of demand, especially mature companies with weighty pension, debt and real estate legacies,” he said. “Flexible and dynamic operating structures are a ­vital component of success.”

Ernst & Young said mounting risks across the Eurozone and the US were responsible for last year’s jump in warnings, compounded by slowing growth in China and reduced demand at home.

The trend was mirrored across the UK as a whole, with 86 profit warnings issued between October and December 2012 – a 26 per cent increase on the previous quarter. That took the total for 2012 to 287, also the highest number since 2008.

Supermarket Tesco, fashion house Burberry and temporary power group Aggreko were among those to issue warnings last year.

Ernst & Young predicts that, barring further economic shocks, profit warnings will decrease in 2013 as expectations are now more aligned to reality.