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Profit warnings up in sector

The FTSE support service sector, including waste firms, has been worst hit by a rise in profit warnings across the economy.

Analysis of warnings by UK listed firms found the highest level in a third quarter since 2008, and a 30% increase on the same period last year.

The FTSE support services sector had 15 warnings in Q3 of 2012 out of a total of 68 across all industries. Financial services firm Ernst and Young which produced the research, said this was the highest level for the sector since Q2 2009.

The report said: “Support services companies in particular are in the corporate austerity firing line and this quarter’s spike in profit warnings could reflect the move by companies to cut their cloth to match new realities.”

It said companies in the sector were a barometer of confidence and demand in the wider economy and increased profit warnings could show that underlying recovery is weak.

In September, UK waste firms May Gurney and Shanks both issued surprise profit warnings.

Mark Wilson, a partner at Catalyst Corporate Finance, told MRW (see page 3 comment) that the waste sector, although affected by the European recession, would see the benefits of investment when the economy recovers.

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