Listed companies in the Midlands issued seven profit warnings in Q1 2025, a 46% decrease from the 13 issued in Q4 2024, according to the latest EY-Parthenon Profit Warnings report.
Nationally, UK-listed companies issued 62 profit warnings between January and March 2025, an 11% year-on-year fall. However, the proportion of listed firms to warn in the last 12 months remains high (18%).
Midlands companies in the FTSE Consumer Discretionary and Industrials sectors issued the highest number of warnings, with two each. However, the Consumer Discretionary sector experienced a 22% decrease in warnings compared to the previous quarter, while the Industrials sector remained unchanged. Other sectors which reported warnings include Technology, Healthcare and Basic Materials.
Jo Robinson, EY-Parthenon partner and UK&I turnaround and restructuring strategy leader, said: “The first quarter of 2025 may now feel like a different era for many businesses, but the latest profit warnings data reveals underlying weaknesses that will be magnified by recent tariff disruptions and the resulting economic fallout.
“Nearly one in five listed firms issued a warning in the last 12 months and that’s a level typically associated with a period of economic shock.
“UK businesses have faced unprecedented challenges in recent years and have developed admirable levels of resilience in response, which should serve many well as the global economy navigates the coming months of uncertainty. At times like these, businesses must focus on staying nimble by planning for a range of different scenarios and continuing to build operational and financial resilience.”
Contract cancellations continue to be leading factor for profit warnings
The leading factor behind profit warnings in Q1 was contract and order cancellations or delays, cited in 40% of warnings – the highest percentage recorded for this cause in 25 years of EY’s analysis. Policy change and geopolitical uncertainty (26%) and labour market issues (18%) were cited as the other main drivers for warnings during Q1.
So far in Q2, half (50%) of the profit warnings issued by UK-listed businesses in April cited the direct or indirect impact of tariffs and resulting recent global trade disruption. The average share price fall on the day of warning also climbed, up from 13% in Q4 2024 to 17% in Q1 2025 and almost a fifth (19%) in April 2025.
Claire Gambles, EY-Parthenon turnaround and restructuring strategy partner in the Midlands, added: “UK companies have faced many challenges in recent years, but ongoing global trade disruption has the potential to bring even more substantial and far-reaching repercussions. Demand and supply shocks from the pandemic and geopolitical events were significant but primarily cyclical disruptions, whereas major changes to international trade policy may have more enduring effects.
“Naturally, these changes won’t happen immediately, and companies will need to balance immediate responses, such as strengthening financial resilience, with strategic shifts, whether by reassessing supply chains and pricing models or exploring new global partnerships, to help respond to further uncertainty over the coming months.”
