UK-listed companies issued 62 profit warnings during the first quarter of 2025, an 11% year-on-year fall. However, the proportion of listed firms to issue warnings in the past 12 months remains high at 18%.

EY-Parthenon’s latest Profit Warnings report found that the leading factor behind profit warnings in Q1 was contract and order cancellations or delays, cited in 40% of warnings – the highest percentage recorded for this cause in 25 years of EY’s analysis. 

Two in five Q1 2025 profit warnings cited contract and order cancellations or delays as a leading factor behind the warning, 26% of warnings blamed policy change and geopolitical uncertainty as a key driver, and 18% cited labour market issues. 

Although not included in the Q1 analysis, half of the profit warnings issued in April cited tariffs and the impact of recent global trade disruption, with the median share price fall on the day of the warning up to almost a fifth (19%) in April 2025. This is up from 11.9% in Q4 2024 and 14.8% in Q1 2025. 

Software and Computer Services (10), Industrial Support Services (nine) and Construction and Materials (five) were the FTSE sectors with the highest number of profit warnings during Q1.

We interviewed Jo Robinson, EY-Parthenon Partner and UK&I Turnaround and Restructuring Strategy Leader, about the results.

Was there anything surprising about these latest results?

“EY has been reporting and analysing the number of profit warnings issued by UK-listed businesses, along with the main causes, for more than 25 years. In the last year, one of the most surprising features has been the sheer number of companies warning – which has exceeded 2008 levels – but this underlines how relentless things have been for businesses, with one challenge after another.

“A key theme of our latest quarterly report is the impact of yet another major challenge: increased trade tariffs and resulting global trade disruption, with half the warnings issued by listed firms in April citing this as a leading factor.

“This may not be surprising, considering the much-publicised and wide-ranging impact on businesses of the sudden shifts in US trade policy. However, it will now be interesting to see how significant its impact will be as we continue in Q2 and into Q3, particularly how it may hinder companies’ ability to plan and forecast, and the disruption caused to supply chains, both of which are among the common causes behind warnings.”

Do we see any trends emerging? What’s most concerning and what’s most encouraging?

“With such widespread focus on tariffs, the first quarter of this year now feels like a different era. But our Q1 findings revealed underlying weaknesses that are being, and will continue to be, magnified by recent global trade uncertainty.

“Primary among these is that a record two in five (40%) of the 62 profit warnings issued during the first quarter cited contract and order cancellations or delays. This was already a clear indicator of ongoing uncertainty and was also the most cited reason throughout 2024, behind more than a third (34%) of all warnings.

“On one hand, a clear concern is that tariffs will only exacerbate this issue, by further dampening business confidence and restricting spending. But on the other, firms have been grappling with so many different challenges over a sustained period of time, which means we’ve already seen strong evidence of the resilience and adaptability they will need to continue to target growth.”

What challenges are businesses facing and how can they mitigate risks?

“Businesses are facing multiple challenges beyond tariffs. Indeed, our report on Q1 found that just over a quarter of profit warnings (26%) cited policy change and geopolitical uncertainty, while nearly one in five (18%) blamed labour market issues, as firms prepared for April’s increase in employment costs.

“Uncertainty isn’t a phase and, in times like these, it’s less about what companies are doing than what they’re not doing. It’s also less about making mistakes and more about ensuring they are taking the positive, practical steps they need to build sufficient resilience to meet the challenges of this more volatile economy. 

“These steps include balancing immediate responses, such as strengthening financial resilience, with strategic shifts like reassessing supply chains and pricing models, or exploring new global partnerships.”

What can companies learn from these findings? 

“Long-term economic uncertainty has made forecasting increasingly difficult for companies for many years, along with their ability to plan or make long-term investment decisions. This can have a significant detrimental impact on both demand and growth.

“The challenges this creates, and with risk levels rising across the board, put an even greater emphasis on firms’ ability to stay nimble, and to plan for a range of scenarios in order to maintain operational and financial resilience.”