Profit warnings issued by listed companies in the North West fell by a ¼ year on year in Q3 2023

6 profit warnings were issued by UK listed companies in the North West, in Q3 2023, down from 8 in the same period last year, according to EY-Parthenon's latest Profit Warnings report.

Half of the profit warnings issued by listed businesses in the North West during Q3 2023 were from companies operating in industrial sectors. Similarly, industrial companies issued the second-highest number of warnings across the UK (20), with only consumer discretionary companies (21) issuing more.

The number of profit warnings issued by listed companies based in the North West during Q3 2023 represented a quarter-on-¼ increase, with 5 warnings issued by companies in the Region in Q2 2023. However, the number of warnings issued over the 1st ¾ of 2023 in the North West (20) is 31% down on last year, when there were 29 warnings issued between:- Q1 and Q3.

Nationally, UK listed companies issued 76 profit warnings between July and September 2023, marking the 1st time the quarterly total has fallen year on year since 2021.

Sam Woodward, EY-Parthenon UK&I Turnaround and Restructuring Partner in the North West, said:- "Profit warnings from industrial FTSE sectors rose across the UK during Q3 2023, so it's unsurprising to see that reflected in the North West, where companies in this sector are particularly prevalent. While it is positive to see the total number of warnings issued in the North West and nationally has fallen compared to this time in 2022, the levels for both remain higher than normal. Going forward, the lagged effect of high interest rates will likely have a significant bearing on how businesses perform, and consequently the level of warnings we expect to see going forward. Scenario planning and stress testing should therefore continue to be a priority for businesses in the North West amid a challenging economic backdrop."

National profit warning figures... Prior to Q3 2023, warnings issued by UK listed companies had risen year on year for 7 consecutive quarters, the longest run of consecutive quarterly increases since 2008. UK-listed companies issued 86 warnings in Q3 2022 and 51 in Q3 2021. Despite the year on year fall, the number of Q3 2023 profit warnings remains 18% higher than the post-Global Financial Crisis quarterly average.

The report reveals that persistent inflation and rising interest rates continue to put significant pressure on UK businesses. 33% of the warnings in Q3 2023 cited tougher credit conditions as a factor; the highest level recorded by EY-Parthenon since 2008.

Broader economic uncertainty also played a role across many of this quarter's warnings, with 21% citing delayed or cancelled contracts and 18% citing weaker consumer confidence. 20% of Q3 warnings cited the slowing housing market as a factor, while the same number (20%) referenced cost pressures.

In the last 12 months, 18% of UK listed companies have issued a profit warning.

Jo Robinson, EY-Parthenon Partner and UK&I Turnaround and Restructuring Strategy Leader, comments:- "While it's encouraging to see UK profit warnings fall for the 1st time in 2 years, the growth of credit-related warnings indicates that pressure on businesses is unlikely to ease for the foreseeable future. In fact, we're seeing economic stresses extend up the value chain, spreading to mid-market companies. It's clear from this data that the steepest rise in interest rates in 40 years continues to take its toll, with a high proportion of warnings due to an increasingly expensive borrowing environment. This poses a risk for companies that are due to refinance and we're already seeing this affect sectors where credit is a key activity driver, such as in the housing market. Unlike 2008's Global Financial Crisis, today's companies, banks and consumers all have stronger balance sheets and extended debt maturities, which will continue to stagger the effect of base rate rises. This adds a layer of resilience but shouldn't create overconfidence. Businesses that are at risk should act immediately to reshape operations to withstand future shocks. Delaying action risks damaging business value, particularly in this fast moving market."

THE Department of Health and Social Care (DHSC) has announced that a new NIHR Research Delivery Network (RDN) will commence in 2024 to support the successful delivery of health and social care research in England.

Support for research delivery will encompass studies funded by Government, industry, and charity partners, ensuring a thriving and vibrant portfolio of studies so that as many patients as possible have opportunities to participate.

The Government has an ambitious strategy to make the UK the best place in the world for commercial companies to bring their innovative new treatments and technologies, following the publication of the review into commercial clinical trials by Lord O'Shaughnessy in May 2023 which set out a clear blueprint for how the UK can return to its global leadership role. With this in mind, the RDN will ensure a strong and seamless connection between industry and the NHS, with its unique, proven capacity to embed research at the point of care.

After an open competition, the University of Leeds will be the supplier of the NIHR Research Delivery Network Coordinating Centre (RDNCC) until 31 March 2029. They will be joined by 12 new Regional Research Delivery Networks (RRDNs), hosted by NHS Organisations the length and breadth of the country. The Regional RDN contracts will commence on:- 1 October 2024.

Together, they will form the NIHR Research Delivery Network. This will operate as a single organisation across England, with a joint leadership function that will balance Regional context, expertise and leadership, with national co-ordination and strategy, involving DHSC policymakers.

The new NIHR RDN will support the country's world class research system to deliver high quality research that enables the best care for patients and the public. It will work across the health and care system, with staff in all health and care settings, to support the effective and efficient initiation and delivery of research. This will benefit people receiving care now and in the future. It will support the NHS and care services and generate benefits for the economy of the UK.

While the NIHR RDN is new and responds to the needs of the health and care research system of the present day, it will build on the notable successes of the NIHR CRN. The CRN supported a transformation in the strength of England's research delivery system, promoted the successful delivery of studies and underpinned the dramatic expansion of health research participation.

Designed for the future... In planning the new NIHR RDN, we listened carefully to stakeholders across the research system, to ensure the RDN was reformed and strengthened to provide a consistent, customer focussed approach, fit for the future needs of the system.

The NIHR RDN will learn and adapt to the changing domestic and global environment for health and care, life sciences and advancements in research design and delivery. It will focus on continuous improvement in services and outcomes, driving innovation across the system, and playing a full and active role in implementing Government policy, including the Life Sciences Vision, policy for life sciences R&D, the UK Recovery, Resilience and Growth programme and the Lord O'Shaughnessy's review into commercial clinical trials in the UK.

Professor Lucy Chappell, Chief Executive of the NIHR said:- "The new NIHR Research Delivery Network is designed to provide an enhanced, consistent service for all those involved in research delivery. It includes part of a system wide drive to increase commercial clinical trials, ensuring we work more effectively than ever with the life sciences industry to deliver the best, most cutting-edge health and care research for the British public, alongside research funded by the Government and charities. Access to research opportunities in under served Regions is crucial and the new NIHR RDN will be pivotal in supporting new treatment and models of care to communities with major health and care needs. It will build capacity to extend research delivery in primary, community and social care settings to make it easier for patients to get access to cutting-edge treatment, through research. The plans and ambitions we have for the RDN have evolved from the excellent work of the Clinical Research Network over the last 9 years. Its many dedicated staff have worked incredibly hard to support England to deliver some of the best health and care research during this time. Without their passion and determination, so much of the world leading research produced in this country during the COVID19 Pandemic would not have been possible."

Professor Mark Kearney, Executive Dean of the Faculty of Medicine and Health, University of Leeds said:- "We are delighted to host the new NIHR Research Delivery Network. UK health and care research is already recognised as being world leading. The University of Leeds, as part of the Research Delivery Network Coordinating Centre, is poised and eager to work with the health and care system to make a step change in how we deliver this research. We will harness the talent of our NHS staff and generosity of the population to progress new ways of working to support the delivery of research to achieve our ambitions to improve the health and wealth all our communities."

Lindsey Hughes, Director of Research, NHS England said:- "NHS England looks forward to working with the new NIHR Research Delivery Network Coordinating Centre and the 12 Regional Research Delivery Networks (RRDNs), building on the successful partnership we have established with the current NIHR Clinical Research Network. The RRDNs map to Integrated Care Systems (ICS) footprints, making it easier for ICS research leaders to engage with the support available to them. This will further enable the country's world class research system to deliver high quality research that enables the best care for patients and the public."

Enabling access to improve the health and wealth of the nation... The evolution of the CRN into the RDN will help meet the current and future needs of the country for increased capacity and capability within the research system for the health and the wealth of the nation.

The RDN will deliver an enhanced study support service which will enable improved access to research infrastructure for the life sciences industry and researchers. The expertise and site-level intelligence of staff from Regional RDNs will be drawn together with the national oversight and leadership of the RDN Coordinating Centre to provide a more effective end-to-end service for customers.

The new RDN, working with the wider system, will enhance equality of opportunity for people to get involved in research, no matter who they are or which part of the country they reside. It will enable research activity to follow patient and service user need, ensuring research is conducted in communities living with the greatest disease burden, in collaboration with patients, carers and the public, investigators and study sites.