The Excitement Of Profit Warnings

Tomorrow's Business

News editors get very, perhaps even bizarrely, giddy about profit warnings. Like electric eels in a plug socket, someone said.

It’s something to do with the combination of the words. Profit – that’s a good thing, right? But Warning, straight after, sounds so exciting.

Last week we got three profit warnings at the same time from British Airways, Pearson and Imperial Brands.

On this occasion, the excitement was justified. With equity markets basically bullish despite Brexit, three big companies in entirely different industries all saying things are worse than expected suggested summat was up.

It might just be management incompetence, but that can’t be the whole story. More usually, the issue of profit warnings is a source for battle between hacks and flaks, with the hacks trying to insist the RNS clearly IS a profit warning and the flaks insisting it is not.

In the old days, there was an agreed standard: a company warning that profits would be 10% lower than expected. These days, almost anything passes. Blame that on news editors getting younger.

(A news editor writes: shut up and file me some copy.)

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