UK-listed companies in the FTSE Construction and Materials sector issued six profit warnings during the third quarter of 2025, the joint highest quarterly total since the height of the Covid-19 pandemic in Q2 2020, when nine warnings were issued, according to EY-Parthenon’s latest Profit Warnings report.
Listed firms in the sector have now issued 14 profit warnings so far this year, already nearly three times the five warnings recorded during the whole of 2024.
The six warnings issued in Q3 – which matched the totals for both Q2 and Q4 2023 – mean that Construction and Materials was the FTSE sector to issue the joint second most profit warnings in the third quarter, level with FTSE Media and behind only FTSE Software and Computer Services, with 10.
So far in 2025, the leading factor behind profit warnings cited by UK-listed construction companies is contract and order cancellations or delays, referenced in more than two-thirds (70%) of the 14 warnings to date.
Tim Vance, EY-Parthenon UK&I Turnaround and Restructuring Partner, said: “The latest data shows that FTSE Construction and Materials companies have come under renewed pressure so far this year, with the number of profit warnings already nearly triple their 2024 level. The sector is contending with a myriad of challenges, including residential market weakness, continued issues with planning applications, commercial uncertainty, budget constraints, and delays tied to new safety regulations. Regulatory complexity – particularly that linked to the Building Safety Act – continues to delay approvals, while legacy liabilities and labour shortages squeeze margins, and rising National Insurance contributions have added further cost pressures. Slower interest rate reductions than were previously projected have also contributed to higher finance costs for major projects.
“While stress has so far been concentrated among smaller firms and contractors, warnings among larger, mid-market companies are rising. Indeed, the average turnover of construction companies to issue warnings in 2025 is just over £400m, up from just over £300m in 2024 and just under £200m in 2023, which suggests broader sector-wide strain.
“Construction companies will be watching the upcoming Budget with interest for any tax changes which directly impact the sector, and any changes in the Government’s approach to administering funding support for the remediation of non-compliant cladding.
“In this ever-evolving landscape, agility and resilience remain paramount. Companies that can effectively manage risk, drive innovation and cultivate strong partnerships will be best positioned to succeed.”
Overall, UK-listed companies issued 64 profit warnings in Q3 2025. The leading factor was policy change and geopolitical uncertainty, cited in nearly half (47%) of warnings, which marked the highest percentage recorded for this cause in more than 25 years of EY’s analysis, and a significant increase from 17% in Q3 2024.
A third (34%) of profit warnings issued in the third quarter cited contract and order cancellations or delays, while 22% referenced tariff-related impacts, including weaker demand and supply chain disruption.
One in five (19%) cited the impact of weaker consumer confidence, the highest proportion recorded for this cause since 2022 and up from just 6% during the same period last year.
Over the last 12 months, nearly a fifth (18%) of UK-listed businesses have issued at least one profit warning.
Jo Robinson, EY-Parthenon Partner and UK&I Turnaround and Restructuring Strategy Leader, added: “The latest profit warnings data shows that the persistent uncertainty which has weighed heavily on UK businesses has spread to households. The standout trend in Q3 was the knock-on effect of weakening consumer confidence, at its highest since late 2022 when rising energy prices and the wider cost-of-living crisis were having an acute impact on consumer behaviour.
“Companies are still clearly seeing ripples from earlier geopolitical tensions and policy shifts, and the proportion of firms to have issued a warning in the last 12 months has consistently been at a level typically associated with a period of economic shock for the past two years. As the Government faces difficult decisions ahead of the Autumn Budget, businesses are continuing to navigate market shifts and external threats, adapting their operations and supply chains to ongoing uncertainty and growing risks like cyberattacks.
“While buoyant equity markets over the summer sustained a narrative of corporate resilience, resilience is not immunity. Forecasting confidence is being disrupted by near-constant change, and restructuring activity continues to rise as persistent pressures leave many companies with tighter liquidity and reduced flexibility. In this environment, firms must adopt a measured, scenario-based approach that balances both agility and strategic clarity.”
