A third of the UK’s listed construction companies issued profit warnings last year, with project delays and cancellations among the main reasons, according to a new report.
EY-Parthenon’s latest Profit Warnings study shows the 36 firms in the FTSE Construction and Materials sector issued 18 profit warnings between them last year, more than three times the number recorded in 2024 and the highest annual total since the height of the Covid pandemic in 2020.
The 18 warnings came from 12 firms, an EY-Parthenon spokesperson told Construction News.
This sharp rise in profit warnings shows the UK’s listed construction firms “continue to be significantly impacted by delays in contract starts or slippage in project timelines, which are impacting revenues, disrupting delivery and straining working capital across the supply chain”, said Tim Vance, partner at EY-Parthenon.
Aside from delays and cancellations at 50 per cent, the other leading factors behind profit warnings were policy change and geopolitical uncertainty (28 per cent of firms) and rising costs (17 per cent), according to the study.
“Increasing regulatory complexity, particularly relating to the Building Safety Act, continues to slow approvals, while legacy liabilities and labour shortages also weigh on margins,” said Vance. “Rising employment costs have added further pressure”.
The report revealed that a third of the construction companies listed on the London Stock Exchange issued at least one profit warning in 2025, more than double the 14 per cent seen in the previous year.
In 2024, a modest recovery in construction was supported by demand for repair and maintenance work, a slight easing of costs and an increase in investment into infrastructure.
But last year “these gains were eroded by intensified cost pressures, regulatory change and weaker demand – all of which exposed persistent structural weaknesses”, the report said.
Looking ahead, Vance noted there are “some signs of encouragement”, not least the potential for infrastructure spending, especially in the utilities sector.
“Lower borrowing costs and easing inflationary pressures could also support demand across parts of the construction market,” he added.
“In this rapidly-evolving landscape, both resilience and agility remain fundamental to success.”
On a quarterly basis, there was a slight fall in the number of profit warnings issued from Q3 to Q4 last year – down from six to four.
Nonetheless, the FTSE Construction and Materials sector ranked third‑highest for warnings last year, behind only FTSE Software and Computer Services, which saw 30 warnings issued, and FTSE Industrial Support Services which saw 23 warnings.
‘Uneasy pause’
UK-based listed companies as a whole issued 240 profit warnings in 2025, which was the lowest annual total since 2021, when 203 warnings were recorded. The EY-Parthenon report shows 17 per cent all UK-based listed business issued a profit warning last year.
Despite the 2025 figure being the lowest in four years, Jo Robinson, partner at EY-Parthenon, said it “feels more like an uneasy pause than a turning point”.
“Much now hinges on what comes next,” she added. “A bullish recovery where stability and falling interest rates boost confidence, or something more downbeat marked by slow growth and heightened volatility.
“With 2026 now well underway, these two contrasting narratives are finely balanced.”
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Matthew Davies