UK construction profit warnings surge to pandemic-era highs as delays and chaos crush the sector
The UK construction sector faced its toughest year since the Covid-19 pandemic in 2025, with listed companies issuing a surge in profit warnings that more than tripled from the previous year.
According to the recently published EY-Parthenon Profit Warnings report, firms in the FTSE Construction and Materials sector issued 18 profit warnings throughout 2025, up sharply from just five in 2024, and the highest annual total since 33 warnings were recorded in 2020 at the height of the pandemic.
A striking one-third (33%) of the sector’s listed companies issued at least one profit warning last year, more than double the 14% proportion seen in 2024.
This placed construction and materials as the third-worst affected FTSE sector for warnings in 2025, trailing only Software and Computer Services (30 warnings) and Industrial Support Services (23 warnings).
The broader UK listed market saw 240 profit warnings in total for 2025, the lowest annual figure since 2021, but the construction sector’s pain stood out amid ongoing economic pressures.
Delays and cancellations hammer the industry
Delays and cancellations of contracts or orders were the leading culprit, featuring in half (50%) of the sector’s warnings. Other major factors included policy changes and geopolitical uncertainty (28%) and rising costs (17%).
EY-Parthenon highlighted additional strains: slippage in project timelines disrupting revenues and cash flow across supply chains, slower approvals due to increasing regulatory complexity (especially linked to the Building Safety Act), legacy liabilities, persistent labour shortages squeezing margins, and higher employment costs adding further pressure.
“The steep rise in profit warnings across the sector shows that FTSE Construction and Materials companies 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, EY-Parthenon UK&I Turnaround and Restructuring Partner.
“Increasing regulatory complexity – particularly relating to the Building Safety Act – continues to slow approvals, while legacy liabilities and labour shortages are also weighing on margins, with rising employment costs adding further pressure.”
He noted some glimmers of hope ahead, including the potential for increased infrastructure spending, particularly in the utilities sector. Lower borrowing costs and easing inflationary pressures could also support demand across parts of the construction market.
An uneasy pause
Vance stressed that in this volatile environment, “resilience and agility remain fundamental to success. Businesses that can effectively manage risk, drive innovation and cultivate strong partnerships will be in the best possible position to thrive.”
The findings come against a backdrop of broader UK-listed company challenges, where a record 42% of all profit warnings in 2025 referenced policy and geopolitical upheaval, the highest proportion in over 25 years of EY tracking.
Jo Robinson, EY-Parthenon Partner and UK&I Financial Restructuring Leader, described the recent slowdown in overall warnings as “more like an uneasy pause than a turning point,” with many firms recalibrating for lower growth, higher costs, and rapid technological shifts.
