The number of profit warnings that were earlier announced by several British companies plummeted to a three-year low last year according to a recent survey. However, a point of noxious warnings in the last quarter rivalled the height of the global economic crisis was an unexpected twist according to the same survey.

The London Stock Exchange primary markets and the AIM companies issued 255 profit warnings last year as compared with 287 the previous year, EY’s latest Profit Warnings. Companies in the FTSE 350 was able to provide for 31 warnings in the 4th quarter, the identical number as the 4th quarter nearly six years ago.

In broad sense of things, LSE-listed companies announced 73 profit warnings in the last three months which was a 30 % jump on the previous quarter. Moreover, most of the fourth quarter’s saddening news originated from the support service companies that were exposed to the natural resources markets as well at the U.S. government shutdown, while the consumer-facing sectors were the least affected.

Support services – the FTSE’s biggest sector was able to provide for 14 profit warnings and software and computer services had, while aerospace and defence, along with technology, and media hardware equipment had 5 of each respectively.

EY capital transformation leader for the Middle East, Africa and Europe said that the fourth quarter spike appears to be inconsistent with the improving economic data. The global growth anxieties reduced profit expectations in the later portion of the summer with earnings downgrading continued into the final quarter of last year.
The year started with a much faster pace of warnings than it did over a year ago, with companies still feeling the impact of slower global markets with the additional complexities of weaker currency translation as the sterling continues to gather strength in anticipation of higher U.K. interest rates.

The increasing activity along with better economic conditions will not guarantee lesser profit disappointments. The FTSE support service companies are issuing high number of the sector’s constituents, which gave lower than expected profits last year.

The volumes may prove to be increasing; however the public and private sector are keeping tight control on the given costs which resulted in tight margins and extreme competition with little room for error for many in the sector.
Consumer-facing sectors profited from the consumer and housing revival. FTSE general retailers led to a four-year-low of nine profit warnings last year, which was a massive turnaround from the FTSE-topping, the 39th rank in 2011.
Finally, a number of retailer reported much-improved sales with an overall sales going up despite the assistance by dampened expectations that were jeopardised by weak surveys.