Profit alerts lowest for two years

PROFIT warnings from companies on the stock market have sunk to their lowest number for two years, a new report claims.

Figures released last week by accountant Ernst & Young show that just 67 alerts were issued by listed companies in the three months to June, a fall of 26% on the previous quarter.

Overall, profit warnings have halved in the past six months, with the software and computer services sector recording the highest number. Banks and the construction industry fared best.

But Kevin Hewitt, a partner at Ernst & Young's corporate restructuring division, believes this could be little more than 'the lull before the storm'.

He said: 'There is a lot more realism about in the market. Management teams have been getting a better grasp of the profits that can be achieved, rather than predicting profits that are just targets.

'People have become wiser when it comes to operating within the economic downturn.

'The decline in warnings does not necessarily mean that conditions have improved, but that companies are learning to live with them.'