Listed companies in the South West saw a rise in profit warnings during the first three quarters of 2020, new analysis shows.
Businesses in the region recorded a 32 per cent increase in warnings compared to the same period last year, according to the latest EY quarterly analysis of Ƶ profit warnings.
In the first nine months of the year there were 29 warnings from companies headquartered in the region - up from 22 in 2019.
Listed businesses in the travel and leisure industry (five) and industrial support services sector (four) recorded the highest numbers of profit warnings in the South West.
The majority of profit warnings in the West of England (86 per cent) were attributed to Covid-19.
However, the increase was the second-smallest across all Ƶ nations and regions, behind Scotland, which only recorded a six per cent increase for the same period. It was also the lowest increase in England.
Meanwhile, the three Ƶ regions recording the highest year-on-year increase were the South East (137 per cent), Wales (133 per cent) and the West Midlands (119 per cent).
Lucy Winterborne, head of turnaround restructuring and strategy at EY in the South West said: “Whilst it’s clearly been a difficult trading year for South West quoted companies, due to the Covid-19 crisis and ongoing Brexit uncertainty, it’s reassuring to see that our region is bucking the trend seen elsewhere in the country.”
Winterbourne said it wasn’t “at all surprising” that travel and leisure, and support services were hit hardest.
She added: “We’d expect this trend to continue as we make our way toward the end of 2020 and into 2021.”
Nationally, the total number of profit warnings from Ƶ businesses in 2020, at the end of Q3, was 524 - a new record for the annual total, replacing the 19-year-old record of 506 from 2001.
However, the Q3 profit warnings total (58) was actually below average for the quarter (64) and 25 per cent lower than Q3 2019, when there were 77.
The top FTSE sectors warning in the third quarter of the year were: industrial support services (six); investment banking and brokerage (five); and construction and materials (five).
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According to EY, the third quarter is typically the quietest period for corporate reporting and it was amplified in 2020 by the significant fall in earnings expectations earlier in the year, the increase in activity as Covid-19 restrictions were relaxed and as government initiatives kicked in.
Winterborne added: “The summer offered some respite for businesses to prepare for what is expected to be an exceptionally difficult autumn and winter.
“Many businesses have managed to navigate the day-to-day stresses of the current environment by adopting survival tactics.
“However, with government support measures winding down and the reality of Brexit just around the corner, merely going back to basics isn’t enough.”
