Profit warnings from listed businesses in the Midlands fell by 55 per cent in the second quarter of the year – raising hopes of a morale-boosting upturn in the economy.
Five warnings were issued in the region in the second quarter, six fewer than in the first quarter and two fewer than in the same quarter of last year. These figures show the lowest number and percentage of company warnings since the second quarter of 2011, at 4 per cent and 6 per cent respectively.
The number of profit warnings normally fall back in the second quarter, but a drop by more than half reflects a significant upwards shift in economic activity and renewed confidence, according to business advisers EY’s latest Profit Warnings report.
The region follows the UK trend, which saw a 25 per cent quarter-on-quarter fall from 72 to 54 warnings, the largest in four years.
Tom Lukic, EY’s restructuring partner in the Midlands, said: “So far during 2013 there have been 16 profit warnings issued in the Midlands, down on the 20 profit warnings which had been issued at this time last year.
“As the gradual UK recovery continues the economy appears more entrenched and better placed to ride out the aftershocks that have triggered sobering second half dips in economic activity in recent years. That said, the economy still faces significant domestic challenges, especially from inflation. A stagnant Eurozone and cooling emerging markets also look likely to place a speed limit on growth.
“A more benign economic climate should keep the number of profit warnings low, but below par growth will continue to create challenges. Companies should still be flexing their operating and financial structures to adapt and make the most of what is still a relatively modest recovery.”
The five warnings in the Midlands came from General Retailers (2), Household Goods (2) and Electronic & Electrical Equipment (1). Meanwhile, companies in the FTSE General Retailers index issued just two profit warnings in Q2 2013.