PROFIT warnings soared to an eight-year high in the first quarter of 2009, with economists warning that the tone of company statements has darkened and the worst is yet to come.
Almost 120 listed companies raised the alarm in the first three months of the year, the highest number since 2001, as the impact of the credit crisis continues to bear down on cash-strapped companies.
With a host of well-known names having alread
y disappeared from the stock market, figures published today by Ernst & Young show 117 companies have told their shareholders profits will take a hit this year.
Support services firms, which include everything from recruitment consultants to waste management companies, topped the list of troubled businesses with 22 warnings, followed by the media and software and computer firms.
This broad industry spectrum reflects the growth and spread of the credit crisis into a full-blown recession, now passing down the credit and supply chains from financial services to consumer services and manufacturing, accelerating as consumers retrench.
Colin Dempster, restructuring partner at Ernst & Young, warned that the UK economy is still at least six months away from any sign of a recovery and that he could not see the market "bottoming out" until the beginning of next year.
He said: "The toxic mix of the credit crunch, together with a global economic downturn, is exposing corporate frailties and accelerating cost-cutting and retrenchment. Governments and central banks also have little room to manoeuvre in their fight against recession, even before the impact of diminishing tax receipts truly hits home."
