Profit warnings highest since 2001

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Last year saw steep rise in the number of profit warnings issued by UK companies, giving the highest annual total since 2001, says a report from Ernst & Young.

Some 381 profit warnings were issued in 2005, compared to 294 in 2004 - a rise of 23%. The main reasons given by companies were sales which fell short of forecasts, difficult trading and market conditions, and increasing costs.

The 23% increase in profit warnings is largely down to the collapse in consumer confidence, triggered by high debt levels and a slowing housing market,and because UK economic growth halved to 1.6%, the lowest annual rate since 1993, said Andrew Wollaston, Partner at Ernst & Young.

"Whilst there appears to be the beginnings of a recovery in the housing market and more positive news of Christmas trading from retai...

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