Begbies Traynor: Jump in businesses going bust lifts firm’s profit guidance
Begbies Traynor expects its annual sales and profits to trade ahead of market expectations thanks to a surge in the number of businesses going insolvent.
The London-listed insolvency specialist told investors that revenues will rise by 11 per cent to £122m up from £110m in the previous year.
The consultancy group also said its “enhanced reputation” in mid-market insolvency will help boost adjusted profit before tax by 16 per cent to £20.7m up from £17.8m in 2022.
A difficult trading outlook for retail and hospitality businesses largely fuelled by a slowdown in consumer spending and high inflation has been a boon for Begbies Traynor.
The business was appointed as Paperchase’s administrator in late January after the stationary chain went bust closing over 100 stores across the UK.
Moreover, some 1,685 businesses registered for insolvencies in April, according to figures recently published by the government’s insolvency service.
“We have started the new year confident in our outlook for a further year of growth. Our insolvency team will benefit from their recent insolvency appointments, together with anticipated further growth in the insolvency market,” Ric Traynor, executive chairman of Begbies Traynor Group plc, said.
Despite the boost, investors did not respond positively to the company’s news, as its share price fell 1.14 per cent when markets opened this morning.
“A better-than-expected trading update from corporate restricting group Begbies Traynor is good news for its shareholders, but typically a negative sign for the state of UK business,” Russ Mould, investment director at AJ Bell, said.
He added: “It has reported an increase in liquidations and administrations, which is a worry for the economy, so too is guidance from Begbies for further challenges to UK businesses.”