(By Richard Holway 9.00am 6th Apr 09) Our friend George O'Connor of Panmure Gordon today reports research released by Ernst & Young today reveals that UK plc issued 117 profit warnings in the first quarter of Q1 2009, the highest since Q1 2001 and the third quarter in a row that UK plc has issued more than 100 profit warnings.
Ernst & Young comments: “It is not just the number of warnings that concerns us: the tone of company statements has also darkened. The prospects for 2009 appear as uncertain and as gloomy as at any point in the crisis. Green shoots will find it hard to flourish in such stony ground; we still believe that the worst of the downturn for many companies is yet to come.” The highest warning sectors were Support Services (22), Media (13), Industrial Engineering and Software & Computer Services with ten each and General Financial (9). Says E&Y “The only bright spots appear to be in high-tech areas and less cyclical areas”.
You may ask how that fits with my Spring in the Air? post yesterday. Any low point will be accompanied by a peak in the number of profit warnings being issued. We would expect that peak to occur in the next quarter or three. We'll keep a close eye on E&Y's numbers in the next few quarters. A reduction in profits warnings will indeed be a positive sign.
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