UK listed firms issued third-most profit warnings ever last year
One in five UK-listed companies issued a profit warning in 2024, according to EY, revealing the scale of the challenges facing the business community.
This was the third highest share of firms issuing warnings in 25 years, behind only the pandemic and the aftermath of the Dot-Com Bubble.
However, at 274, the total number of profit warnings was actually slightly lower than the 294 reported in 2023.
The most common factor for profit warnings, cited in 34 per cent of cases, was contract cancellations or delays. This was the highest number of firms citing this issue in more than 15 years.
Higher costs triggered nearly one in five (18 per cent) warnings in the last year.
Jo Robinson, restructuring strategy leader at EY, said firms had faced an “extraordinary succession” of challenges since the pandemic, including higher interest rates, supply chain disruption and high energy costs.
“2024 was also an exceptional year for global geopolitical uncertainty and policy upheaval, with a record level of profit warnings linked to contract and spending delays as businesses held back from recruitment and investment,” she added.
Firms in the industrial support services sector – like consultancy firms, industrial suppliers and recruitment companies – were the worst hit, issuing 37 warnings in the year.
Although the number of profit warnings in the retail sector fell to 20 last year, down from 24 in 2023, EY noted there were seven in the final quarter of 2024 alone.
This increase in retailer distress at the tail-end of last year has come even as many firms have issued positive trading updates for the festive period.
Silvia Rindone, retail lead at EY, said the number of profit warnings demonstrated that consumer demand is “only part of the story”.
“Higher employment costs and the investment needed to adapt to changing consumer behaviour will challenge every retailer during 2025,” she said.
The pace of profit warnings has eased slightly in the early weeks of 2025, but Robinson warned that “the road ahead remains rocky”.
In particular, employers will have to to deal with the government’s £25bn national insurance increase alongside the 6.7 per cent increase in the minimum wage.
A report from Begbies Traynor, released at the end of last week, showed that the number of firms facing financial distress climbed by 50 per cent in the final quarter of last year.