Q2 2025: UK Companies Issue a Profit‑Warning Frenzy
59 profit warnings were announced during the second quarter, a 20% jump from last year’s 49. EY‑Parthenon’s fresh Profit Warnings report shows that uncertainty is running rampant, and businesses are feeling it more sharply than ever.
What’s Behind the Spike?
Nearly half of the warnings cite policy shifts and geopolitical drama—all 46% of the total. That’s a huge leap from only 4% in Q2 2024, and the highest share in over 25 years of EY’s data.
- Contracts and shipment hiccups: 40% of warnings mention order cancellations or delays.
- Tariff headaches: 34% tie it to weaker demand, supply chain snags, and currency jitters.
- Over 12 months, 19% of UK-listed firms have issued at least one warning.
A Nod from EY‑Parthenon
Jo Robinson, Partner and Turnaround & Restructuring Strategy Lead, said:
“The latest data shows how persistently uncertain the business climate is, choking earnings and forecasts. We’re seeing more than ever how policy swings and geopolitical tensions bleed through to the bottom line.”
She added:
“Global tariffs are just one piece of the puzzle. Together, these pressures sap confidence, bother decision‑making, and tighten spending budgets.”
Her takeaway? It’s uncertain whether these warnings are a cyclical hiccup or a structural shift. For now, executives must roll a “scenario‑based” approach, balancing nimbleness with a clear long‑term strategy.
Sector Spotlight
- Industrial Support Services – 8 warnings (covers B2B service providers, industrial suppliers, and recruitment firms).
- Software & Computer Services – 6 warnings.
- Retail – 4 warnings straight out of the retail sector.
- Personal Care, Drug & Grocery – added 3, making a total of 7 warnings from the retail‑plus‑groceries mix.
Retail: The Hit‑Hardest
Silvia Rindone, EY Partner and Retail Lead, observed:
“Retailer warnings spiked in Q2, more than doubling Q1’s figures. This surge signals not only softening consumer demand but deeper, structural headwinds.”
She pressed:
“Consumers are increasingly value‑oriented, dagging brand loyalty, which leaves cost‑squeezed retailers stuck at a disadvantage.”
Despite the pressures—rising National Insurance Contributions, the National Living Wage, and tariffs—Silvia sees a silver lining:
- Technology & AI investment remains non‑negotiable.
- Success hinges on “getting the basics right”—a solid range, dependable service, and smart pricing.
- Future‑proofing with leaner operations, sharper propositions, and digital resilience stays key.
Bottom Line
Profit warnings are climbing, driven largely by policy swings, geopolitical tension, tariffs, and supply‑chain snarls. The business landscape feels like a rollercoaster—fast, vertiginous, and hard to code‑predict. Companies that stay agile, keep their eyes on both near‑term scenarios and long‑term roadmaps, and invest wisely in technology will be best positioned to weather the storm—while the rest may find themselves sitting on a bench, waiting for the next loop.
