UK-listed construction companies issued five profit warnings in Q1

UK-listed companies in the Construction and Materials sector issued five profit warnings during Q1 2025, five times the number issued during the same period last year and the same total as throughout the whole of 2024, according to EY-Parthenon’s latest Profit Warnings report.

The latest figure – the highest quarterly total since Q4 2023 (six warnings) – means that Construction and Materials was the FTSE sector to issue the third most profit warnings in Q1, behind only Software and Computer Services (10) and Industrial Support Services (nine).

Including the beginning of the second quarter, more than one in five (22%) listed Construction and Materials companies have now issued a profit warning so far this year.

Of the 62 profit warnings issued by all UK-listed firms during Q1, a record two in five (40%) cited contract and order cancellations or delays as a leading factor – the highest percentage recorded for this cause in 25 years of EY’s analysis. Policy change and geopolitical uncertainty (26%) and labour market issues (18%) were cited as the other main drivers for warnings in Q1.

Tom Watson, Partner, Construction and Property Services M&A, at EY-Parthenon, said: “Despite market conditions for the construction sector showing clear signs of improvement in 2024, our latest data shows that structural weaknesses persist as fresh challenges continue to emerge. The increase in employer National Insurance contributions will further impact budgets already under pressure from a persistent shortage of skilled labour, while delays to contract start dates and project timelines place added strain.

“Navigating these challenges amidst the ongoing heightened economic uncertainty will require the agility to strategically adapt. Companies that can effectively manage risk, drive innovation and cultivate strong partnerships will be best positioned to succeed in this evolving construction landscape.”

So far in Q2, half (50%) of the profit warnings issued by UK-listed businesses in April cited the direct or indirect impact of tariffs and resulting recent global trade disruption. The average share price fall on the day of warning also climbed, up from 13% in Q4 2024 to 17% in Q1 2025 and almost a fifth (19%) in April 2025.

Claire Gambles, EY-Parthenon Turnaround and Restructuring Strategy Partner, added: “UK companies have faced many challenges in recent years, but ongoing global trade disruption has the potential to bring even more substantial and far-reaching repercussions. Demand and supply shocks from the pandemic and geopolitical events were significant but primarily cyclical disruptions, whereas major changes to international trade policy may have more enduring effects.

“Naturally, these changes won’t happen immediately, and companies will need to balance immediate responses, such as strengthening financial resilience, with strategic shifts, whether by reassessing supply chains and pricing models or exploring new global partnerships, to help respond to further uncertainty over the coming months.”