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Mon May 20 2024

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Nearly half of the construction sector has issued profit warnings

6 Aug 20 In the second quarter of 2020, FTSE-listed construction & materials companies issued nine profit warnings, bringing the total number of warnings issued so far this year to 23, according to EY’s latest Profit Warnings Report.

This represents profit warnings from nearly half (46%) of the sector and is nearly twice the number (12) issued in the equivalent period last year. Nearly all (91%) warnings issued this year have cited the impact of Covid-19.

The building materials sector has been hit particularly hard.

Ian Marson, EY UK & Ireland construction leader, said: “While profit warnings have decreased in Q2 compared with Q1, construction is still a sector under stress. We are seeing ripple effects pass through supply chains, including construction. Three-quarters of the warnings issued in H1 2020 came from the building materials sub-sector."

He warned: “There is evidence of significant supply chain stress with an increased risk of vulnerability, not least because of the potentially conflicting challenges posed by Brexit. Companies that have chosen to keep inventory levels low may need to rethink their strategy this autumn.”

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