Warnings at new high
Supply disruption a new hazard as profits hit
The travel sector was hard hit in the first half of the year
* Profit warnings issued in the first half of 2020 hit a 20-year high in Scotland
* Scotland has the smallest increase of profit warnings across UK locations
* 94% of listed businesses in Scotland cite COVID-19 as the reason for warning
* Travel & Leisure sector most affected in Scotland
Disruption to supplies is a potential hazard facing companies as they adjust to the twin challenges of the pandemic and Brexit, according to a restructuring specialist.
Fiona Taylor, associate partner at EY Scotland, says supply chain vulnerability will be one of the biggest areas of risk for companies in the next six months.
Ms Taylor believes the issue will feature highly on corporate agendas, not least because of the additional challenges associated with Brexit.
“There are already large-scale restructurings in the UK market that could have considerable impact along supply and value chains,” she says.
“Boards need to guard against complacency and be ready to take swift and decisive action to reshape their business to face a different future than they imagined just a few months ago. Companies could find that previously healthy parts of their business are no longer profitable. This is a pivotal moment for Scotland and UK plc.”
Her comments came as new data from EY reveals an unsurprisingly high number of profit warnings as the economy almost ground to a halt.
Across the UK, almost a third (33%) of listed companies – compared to 18% in 2019 – issued a profit warning in the first half of 2020. EY recorded 466 profit warnings in H1 2020 – considerably more than the total number issued last year (313).
The number issued by listed businesses headquartered in Scotland in the first half of 2020 increased by 45% year-on-year, with 94% citing the impact of the COVID-19 pandemic.