Profit warnings citing global upheaval hit ‘record high’
The proportion of profit warnings issued by UK-listed companies where bosses complain about policy uncertainty and geopolitics reached a record high last year, fresh analysis has shown.
New data by EY has shown that 240 firms warned investors that profits would fall short of market expectations.
Though this was the lowest figure since 2021 – when just 203 warnings were recorded – analysts said this represented the highest level of warnings where policy and geopolitical uncertainty were cited, with two in five statements (42 per cent) mentioning the issue as factors reducing profits.
Examples of complaints against both domestic and global policy flip-flopping include the motor finance debacle, tariffs and national living wage increases.
This compared to just 12 per cent of statements referencing uncertainty in 2024 when contract and order cancellations was the biggest driver behind profit warnings.
The data, which is seen as being key to understanding how listed companies are performing across the board and which issues are holding listed companies back, uncovered struggles across the tech sector and retail.
Out of the 240 profit warnings issued by companies, around 30 came from software and computer services.
New figures may rattle some investors who have taken a hawkish view on the AI investment boom that has driven growth across both the UK and US economies, with some City analysts suggesting expenditure may not bring about expected returns.
Microsoft founder Bill Gates is among a number of tech titans to warn that not all tech companies would win out from the surge in investment.
“It’s going to be hyper-competitive,” Gates said.
“A reasonable percentage of those companies won’t be worth that much.”
Retailers flood investors with profit warnings
Another 23 profit warnings came from retail, according to analysis, which could add to criticism of the Labour government over its business policies.
Weak demand among consumers and higher costs through a record tax burden were blamed for the decline in profit expectations across the sector.
EY partner Silvia Rindone said retailers were worried about consumers “delaying their purchases” and becoming “more selective” with items.
“Mixed Christmas trading performances underlined these pressures and divergences,” Rindone said.
“There is also a race to keep pace with rapidly evolving AI and agentic capabilities, which continues to create a widening gap between those able to invest in digital, AI and operational agility, and those struggling to hold their ground amid increasing market share of fast-moving, tech-savvy competitors.”