Profit warnings from UK-listed companies fall again, but worries remain

Proportion of profit warnings issued by UK-listed companies fell overall in 2025. However, the number citing policy and geopolitical uncertainty reached a record high, setting a worrying precedent for the coming 12 months.

The number of profit warnings from listed companies in the UK has fallen to its lowest in four years, with 240 firms issuing them in 2025. That means that – despite another 12 months of trade wars, geopolitical aggression and an inflation rate which stubbornly refuses to fall – there were 34 fewer profit warnings among listed firms than in 2024.

There were moments in which that seemed to be in doubt. Research from EY-Parthenon in the middle of 2025 had found that profit warnings were on the rise – with 59 in the second quarter alone. That was a 20% rise compared to the same period a year before – but now with the whole year’s data, the researchers have shown that that 17% of UK-based listed businesses issued at least one profit warning, down from 18% the year before.

Even so, the firm’s analysts claim that the figures do not tell the whole story. According to Jo Robinson, EY-Parthenon’s UK&I financial restructuring leader, while the pace of UK profit warnings has slowed, “this feels more like an uneasy pause than a turning point” – as “many firms continue to face a challenging and uncertain backdrop, with a record level of warnings referencing the knock-on effects of policy and geopolitical upheaval”.

Robinson added, “In the last year, we’ve seen businesses shift their focus from planning for a return to previous norms, to recalibrating for a global landscape of lower growth, higher costs and rapid technological disruption. There is no playbook for adapting to this new reality and, while stronger liquidity and lower interest rates have given companies some breathing space, we expect restructuring activity to build as these issues come to a head.”

To that end, 42% of the profit warnings issued by UK-listed companies in 2025 cited the impact of policy change and geopolitical uncertainty as a leading factor. EY-Parthenon’s latest Profit Warnings report notes this is both a marked increase from 12% during 2024, and the highest annual proportion recorded for this cause in more than 25 years of the firm’s analysis.

At the back-end of the year – where the tone for the next 12 months has been set – EY-Parthenon found that there was also a significant rise in sales falling short of forecasts, and contracts being discontinued. Contract and order cancellations or delays, with cited in 33% of warnings for the full year, followed by weaker consumer confidence and rising costs, each referenced in 11% of all warnings. But in the final quarter, the leading cause of profit warnings was sales falling short at 35%, while delayed contracts were cited by 18% - ahead of geopolitical issues, on 13%.

The sectors with the highest number of profit warnings last year were Software and Computer Services (30 warnings), Industrial Support Services – which encompasses business service providers, industrial suppliers and recruitment companies – and Retailers (both 23). When combining the FTSE Retailers sector and FTSE Personal Care, Drug and Grocery sector, which includes supermarkets, 34% of listed retailers issued a warning during 2025, marking the fourth consecutive year that this proportion has been above a third.

Silvia Rindone, EY’s UK&I retail lead, added, “The retail sector began the new year under sustained pressure caused by weak demand and rising costs. Although sales were up in 2025, this only tells part of the story, with many businesses still struggling to absorb cost increases or pass them onto customers given ongoing price wars among competitors. Mixed Christmas trading performances underlined these pressures and divergences. Success in the year ahead will depend on smart execution, clarity of proposition and the ability to capture full-price sales and loyalty in a highly competitive market.”