Datatec warns of weaker earnings
Datatec, the listed ICT group, expects revenues for the year ending February 2013 to reach approximately $5.4 billion, lower than a figure of between $5.5 billion and $5.8 billion it originally forecast amid continued softness in its Westcon business.
Westcon is a distributor of converged communications solutions; focusing on tailoring voice, security, mobility, storage and power solutions.
However, the group expects its earnings to top the amount of $5.0 billion reported in 2012, as it includes Westcon’s acquisition of Afina Group in July 2012 and continued revenue growth in Logicalis.
Profit after tax is expected to be in the range of $80 million to $90 million, with $89 million reported in 2012.
Datatec said its underlying earnings per share are unlikely to reach that of last year, 2012: 47.9 cents, but are expected to be in excess of 40 US cents.
Earnings and headline earnings per share are also anticipated to be in excess of 35 US cents in 2013, softer than 43.5 cents, 43.1 cents in 2012 respectively.
The group says it expects to maintain its distribution to shareholders, via a final capital reduction out of contributed tax capital in lieu of a dividend, at 9 US cents (2012: 9 US cents).
This would take the final distribution amount to 17 US cents per share for the year ending February 2013, up from 16 US cents in 2012.
Datatec noted that since its trading statement on 3 December 2012, which was prompted by a weaker than expected performance by Westcon in the third quarter, Westcon has reported continuing softness in its performance.
“December was particularly challenging especially in the US and Europe. In contrast, it said that Logicalis continues to perform strongly and in line with expectations,” it said.
The group said it continues to operate with comfortable head room against its working capital lines.
Jens Montanana, CEO said: “Our global reach and diversity are continuing to provide relative resilience against the poor economic backdrop of many of the world’s economies. Although disappointed by the recent developments in Westcon, we are not immune to the continuing weakness in many sectors, especially in the more mature markets. We are already adjusting our business model accordingly.
“Latin America, the Middle East, Africa and Asia remain the best performing regions. Westcons performance in North America and Europe has been weaker than expected whilst Logicalis has performed robustly in both of these regions.”
Westcon
According to Datatec, Westcon’s second half performance has most notably been affected by poorer market conditions and external factors in North America, as well as additional one-off costs associated with the SAP implementation.
Europe has remained weak whilst Asia Pacific and AIME have slowed; Latin America remains the most robust region.
Cash generation however, is expected to improve at Westcon in light of recent slower trading as working capital demands ease.
The division recently announced the acquisition of Comztek, a major ICT and networking distributor in Africa.
Logicalis
Datatec said that Logicalis has continued to perform strongly and in line with expectations amidst difficult market conditions.
“Operating profitability in the second half of the current financial year is expected to be better than both the first half of the current financial year and the second half of the prior financial year.”
Brazil is again generating a significant proportion of operating profitability, with both the US and UK having recovered and performing well.
Consulting Services
Analysys Mason is expected to report a solid year whilst other businesses in this division have experienced weaker trading conditions in the second half, Datatec said.
The group expects to publish its results for the year ending February 2013, on about 15 May.
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