Profit warning sends Datatec tumbling - TechCentral

Profit warning sends Datatec tumbling

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JSE-listed technology group Datatec’s share price plunged more than 8% in morning trading on Wednesday after it warned shareholders of a sharp decline in earnings.

The group, which operates IT services and distribution businesses in markets around the world, said that for the six months ended 31 August 2015 it expects foreign exchange losses of US$10,6m (from $600 000 a year ago). As a result, headline earnings per share will fall by 25% from a year ago to $0,12/share ($0,16 in the first half of the prior year).

Underlying headline earnings per share will also fall, by 18%.

Datatec, which will publish its interim results on 21 October, said in July that despite good revenue growth, especially in North America, profitability would be affected by restructuring at subsidiary Westcon in Europe, the Middle East and Africa as well as by a reorganisation at subsidiary Logicalis in the UK.

Continued weakness of emerging market currencies has also hit the group.

“In particular, the imposition of capital controls at the end of 2014 in Angola and the devaluation of the Angolan Kwanza resulted in a foreign exchange loss of $8,9m in the first half of the 2016 financial year at Westcon. Management has instituted a series of actions to control the exposure and reduce further losses,” it said in a trading statement on Wednesday.

By mid-morning, Datatec was trading down by 8,4% at R67,44/share. The counter has added 38,5% in the past 12 months.  — © 2015 NewsCentral Media

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