By
Harry Glass
13:31 GMT, 26 January 2013
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13:31 GMT, 26 January 2013
Company profit warnings jumped to their highest level last year since the height of the financial crisis amid fears over the economy and slower-than-expected demand from China.
The number of UK stock market listed companies warning over profits leapt to 86 in the fourth quarter from 68 in the previous three months, taking the total to 287 – or 15 per cent, the highest since the credit crunch and banking sector meltdown in 2008.
The report by accountancy giant Ernst Young found industrial companies were the hardest
hit, with the electrical and industrial sectors each issuing 17 profit
warnings last year, up from five and eight respectively in 2011.
Hard work: Industrial companies were the hardest hit, with the electrical and industrial sectors each issuing 17 profit warnings last year
But despite a spate of high profile
retail collapses this month, with the likes of HMV, Jessops and
Blockbuster calling in the administrators, the number of retail profit
warnings fell to 17 last year, from 39 the previous year.
It comes after gross domestic product
(GDP) figures revealed output shrunk by 0.3 per cent in the final three
months of the year, fuelling fears the UK is on course for a triple dip
recession.
Alan Hudson, head of Ernst
Young’s UK restructuring team, said rising uncertainty at the end of
2012 had led to a fall in demand.
He said: ‘Slower-than-expected demand
from China in particular landed heavy blows on companies reliant on
emerging market growth, which would have cancelled out declining sales
elsewhere.’
Transport companies also suffered,
with nearly 40 per cent of listed companies in the sector issuing
warnings, against 16 per cent in 2011.
Despite a spate of high profile retail collapses this month, the number of retail profit warnings fell to 17 last year
Mr Hudson said the number of retail warnings stayed low because shops had already factored in a squeeze on consumer spending.
He added the summer of celebrations had also provided a welcome boost to trading, helping to offset the washout summer.
The travel and leisure sector also fared better last year, issuing just 11 profit warnings, compared with 14 the previous year.
Experts are predicting a steadier year
ahead and a fall in the number of profit warnings, despite concerns
that Britain is heading for a triple dip recession.
Keith McGregor, head of restructuring
for Europe, Middle East and Africa at Ernst Young, said: ‘Eleventh
hour deals in the US and eurozone have removed the immediate threat to
global markets, raising hopes of a more stable year in which a recovery
can plant stronger roots.’