Profit alerts from travel and leisure firms have hit their highest level for nearly four years as the Iran war has hit bookings and sent costs soaring, according to a report.
The latest EY-Parthenon figures showed listed travel and leisure companies were responsible for the highest number of earnings alerts on London’s FTSE between April and June, with seven profit warnings – the most seen since the third quarter of 2022.
It follows the start of the Iran war in February 28, which has taken its toll on a raft of UK sectors as fuel and energy costs have surged and consumers reined in spending.
Travel firms and airlines were among the first to feel the effects of the war, with the likes of easyJet warning over a hit from lower bookings and soaring jet fuel costs.
But many firms have been knocked by the conflict, with the report showing that two in five (40%) of the 80 UK profit warnings issued since the end of February have flagged its impact.
Housebuilders were also a sector in the doldrums during the past few months, with six profit alerts in the second quarter and eight in the first half over all – the highest number for that industry since the start of the Covid pandemic.
Property builders have been sent reeling by rising build costs, falling house prices and lower demand as interest rates have stayed higher for longer amid inflation pressures, much of which has been caused by the war.
The data showed UK listed firms made 59 profit alerts in total across the second quarter, up from 55 in the previous three months.
More than half (53%) cited policy change and geopolitical uncertainty as a major factor, which marked the highest quarterly proportion in more than 25 years of analysis by EY.
Rising costs were flagged by more than a quarter (27%) of firms in their profit alerts, while contract and order cancellations or delays were referenced in 25% and weaker consumer confidence in 14%.
Jo Robinson, EY-Parthenon partner, said: “The latest figures show that pressure and profit warnings are increasingly concentrated in sectors and businesses facing rising costs, cautious consumers and tighter credit conditions.
“Just as one source of pressure begins to ease, another emerges; a year ago, companies were grappling with disruption from tariffs and shifting trade policy, while the conflict in the Middle East has now triggered more than two fifths of recent warnings.
“Beyond geopolitical tensions, businesses face some policy uncertainty – both domestically and abroad – which is creating a source of volatility.”
