Profit Warnings Hit a Two-Year High Nine Days From the Budget
Listed companies issued 65 profit warnings in the three months to September, the most in two years, with 38% citing the war in the Middle East and rising costs the leading factor in 35%. Housebuilders have now issued fourteen this year, more than in 2008. Nearly a fifth of all listed firms have warned at least once in twelve months.
The 2008 comparison is the one that should stop a reader: ten warnings from listed housebuilders at the peak of the financial crisis, fourteen already this year. Household goods and home construction was the worst-affected sector of the quarter, which sits uncomfortably beside the asking-price cuts elsewhere in this column — the same squeeze seen from the builder’s side rather than the seller’s. Jo Robinson of EY-Parthenon, which compiles the figures, identifies something that has changed in kind rather than degree: “with the autumn budget around the corner, profit warnings linked to policy change and uncertainty — once concentrated around fiscal events or elections — have become a regular feature of our data. Businesses have shown considerable resilience, but the pace of policy change is making forecasting, investment and capital allocation much harder.” The chancellor has promised the Budget will give households and businesses “breathing space” while conceding the conflict has pushed borrowing costs to their highest in decades. He is reported to be preparing to raise the small business rates threshold from £12,000 to £18,000.