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Published: 29/07/2025
EY-Parthenon publishes its profit warnings report on a quarterly basis(1). The report outlines the profit warnings issued by companies from different sectors and provides an analysis of the factors driving the warnings issued.
Profit warnings are statements issued to the stock exchange by listed companies to declare that their full-year profits will be materially below management or market expectations.
Key takeaways from the latest profit warnings report
Construction businesses continue to operate in a pressure cooker environment.
The latest profit warnings report from EY-Parthenon showed three warnings were issued by FTSE Construction and Materials firms in 2Q2025, taking the total for the first half of the year to eight. This is more than the total warnings issued by the sector in the whole of 2024.
With renewed cost and demand pressures stoking the fire, let’s take a closer look at the main takeaways from the latest report.
The national outlook
In 2Q2025, there were 59 UK profit warnings issued across all sectors. This was a 4.8% decrease on the quarter and a 20.4% increase on the year.
Escalating geopolitical tensions, rapid and unpredictable policy shifts and uncertainty were the main driving factors of warnings issued. Across the UK, almost one in five (18.9%) companies issued at least one profit warning in the last 12 months – a level usually associated with recession or shock.
That said, the level of profit warnings issued nationally has remained relatively steady since the spike seen during the COVID-19 pandemic. Total UK warnings in the second quarter were well below pre-pandemic 2Q2019.
Source: EY-Parthenon analysis of UK profit warnings
On the decade, the 2Q2025 level was higher by two warnings. When compared against the second quarter of 2009, in the midst of the global financial crisis, the level was lower by four warnings.
Looking ahead, the EY report underlined uncertainty and volatility as structural features of the economic environment with growth and/or renewed disruption from tariffs, policy shifts and geopolitical shocks possible in the second half of the year.
Construction profit warnings in context
At a sector level, the latest insight from EY provides cold comfort for construction businesses for the months ahead.
Delays were the dominating theme across recent warnings issued by FTSE Construction and Materials firms with three-quarters citing slippage in contract starts and project timelines.
This is likely in part due to the Building Safety Regulator’s backlog of building control approval applications for work on higher-risk buildings. As of March 2025, over 1,000 applications were awaiting a decision.
According to the EY report, businesses in the sector said delays are disrupting delivery and straining working capital. Regulatory complexity, particularly in relation to the Building Safety Act, was also spotlighted.
While the report suggested weaker demand may ease pressures moving forward, it pointed out that this tends to aid main contractors more than subcontractors and suppliers where financial stress has been concentrated.
Interestingly, profit warnings issued by larger construction and materials firms are rising. In the whole of 2025, the average turnover of those issuing warnings was just shy of £400 million, up from £300 million in 2024.
Source: EY-Parthenon analysis of UK profit warnings
To date, FTSE Construction and Materials firms rank third for warnings issued this year, behind Industrial Support Services and Software and Computer Services.
Dr David Crosthwaite, chief economist at BCIS, said: ‘New insight from EY-Parthenon has reiterated the unstable environment construction firms continue to operate in. The impact of delays at Gateway 2 is keenly felt and was reflected in the latest BCIS All-in TPI panel discussion.
‘Hopefully, the roll-out of new BSR reforms and guidance on submitting building control approval applications will go some way to addressing this. The recent publication of the Infrastructure Pipeline is also positive news and should help businesses to proactively manage resources in the years ahead.’
Unlike other areas of the economy, construction is often disproportionately impacted by cost increases, usually due to fluctuations in demand uncertainty and materials prices.
EY’s latest Restructuring Pulse Survey(2), which draws insights from more than 200 workout banking professionals (who support firms experiencing financial difficulties) across 25 countries including the UK, showed that construction continues to face significant headwinds. Economic uncertainty, labour shortages and lingering cost pressures were all cited as key factors.
Restructuring activity includes any financial, structural or operational changes made by a business to improve efficiency, adapt to new needs or overcome financial challenges.
According to the survey, construction firms were among those with the most ‘expected’ restructuring activity for the first half of 2025.
It’s clear from this and the latest profit warnings insight that construction is not out of the woods yet. Risks are expected to become more complex and multiply amid ongoing uncertainty, which will continue to challenge businesses across the sector.
However, the UK government has shown it’s listening. Reforms to the BSR and a pipeline of planned work are a promising start, and could begin to turn the narrative around.
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