Profit warnings from DB sponsors decrease 73% in a year

There were seven profit warnings issued by UK listed companies with defined benefit pension schemes in the second quarter of the year. This represents a 46 per cent decrease from Q1 2021 when there were 13 warnings, and is the lowest quarter since the start of the pandemic, the figures showed. 

These profit warnings, issued by seven individual companies, represent 22 percent of all UK profit warnings and 2.5 percent of all UK-listed companies with DB schemes. 

In the 18 months between January 2020 and June 2021, the report recorded both the lowest and highest quarters of warnings since the analysis began in 1999. 

The record low registered in Q2 2021 stands in contrast to the record high of 301 in Q1 2020, when 37 per cent of of companies that issued a profit warning sponsored a DB scheme. 

Karina Brookes, UK pensions covenant advisory leader and EY-Parthenon partner, said: "With many company forecasts having been removed or depressed, and the level of government support still high, it’s not altogether surprising that profit warnings are at a record low this past quarter.

“For many firms, including those sponsoring DB pension schemes, the last 18 months have been characterised by a very cautious approach to spending and a consequent rise in cash on the balance sheet — not least boosted by government finance packages.

"It is likely in the short term that significant sums will go into funding recovery.’’