Profits warnings hit record high

THE number of companies issuing profits warnings has hit record levels, according to a report today from consultancy firm Ernst & Young. It says 149 firms warned on trading in the last quarter of 2001. That brought the total number of alerts for the year to 520 - more than twice as many as in 2000 and the most since the survey began three years ago. More than 40% of companies blamed the US terrorist attacks for worsening business conditions.

And the number of sectors dogged by profits warnings is also widening. While software and computer services continued to generate most warnings - 13% - traditional sectors such as engineering showed a sharp increase on last year. Richard Coates, corporate restructuring manager at Ernst & Young, said: 'We are definitely seeing a continuing shift in the hot spots of corporate distress.'

While the number of profits warnings issued by companies is expected to decline from its record-breaking peak, the bad news for companies is that 2002 is expected to be just as tough.