Profit warnings issued by listed businesses in the South West reached a record high in the first three months of 2020, new data reveals.
Warnings were higher than any previous quarter in the past 20 years, according to EY’s latest Profit Warnings report.
A total of 19 warnings were recorded by EY between January 1 and March 31 this year - more than double the number for the same period in 2019 and an increase of 138 per cent.
Unsurprisingly, companies blamed the Covid-19 crisis, which has temporarily paralysed many businesses.
Profit warnings in the region were spread across a wide range of sectors, but businesses most affected were those operating in the travel and leisure industry.
Lucy Winterborne, head of restructuring at EY in the South West said: “Political uncertainties and rapid structural change pushed UK profit warnings to a 10-year high in 2019.
"Covid-19 has created new problems, but it has also accelerated structural change and exacerbated existing weaknesses.
“When lockdown lifts, it will undoubtedly ease some pressures, but these underlying issues will remain – alongside new challenges.”
EY said it was recording profit warnings on a scale and pace that exceeded anything the company had seen since its analysis began in 2007.
A total of 301 profit warnings were issued by UK-listed businesses in the first quarter of 2020 - almost equal to the entire number issued in the whole of 2019 (313) and five per cent higher than the total for 2018 (287).
When compared to the first quarter of 2019, warnings rose from 89, representing a 238 per cent year-on-year increase.
Although 77 per cent blamed profit warnings on Covid-19 in the first quarter of 2020, "significant" parts of UK plc were struggling before the pandemic, according to EY.
In January 2020, recorded warnings had increased by 43 per cent year-on-year, when compared to the same month last year.
Lucy added: “Some businesses will be able to weather the Covid-19 storm more effectively than others.
"Those with cash reserves or the ability to raise additional finance are more likely to bounce back at a faster rate, whilst for others it will be a slower, more difficult journey.
"The sector a business operates in will also inevitably influence the speed of recovery once lockdown measures are eased and the country settles into a new normality, although this is unlikely to happen in the short term."
