Profit warnings from London-listed businesses reached their highest level in nearly two years over the summer, driven by an energy shock linked to the Iran war that fuelled inflation. A total of 65 warnings were issued during this period, an increase from 59 in the second quarter, according to analysis by EY. This marks the largest number of warnings since 71 were issued in the fourth quarter of 2024.
More than half of the companies attributed the increase to geopolitical uncertainty, with 38 per cent specifically citing the ongoing conflict in the Middle East. Other factors included contract and order cancellations or delays, as well as weaker consumer confidence. Jo Robinson, UK&I financial restructuring leader at EY, noted that these warnings reflect the "variety of structural changes and companies" firms are navigating.
The construction and household goods sectors recorded the highest number of warnings, with eight in total. This included six warnings from listed housebuilders, bringing their year-to-date total to 14, surpassing the 10 issued during the peak of the 2008 global financial crisis. Vistry, Persimmon, and Taylor Wimpey were among the builders issuing new warnings, citing cost inflation, lower sales rates, and muted first-time buyer demand.
Industrial support services, including Hays and Bunzl, and material firms also issued six profit warnings during the period. Claire Gambles, financial restructuring strategy partner at EY, stated that "Housebuilding has become the epicentre of these cost and interest rate pressures."