Datatec: Oh no, EPS will be 20% lower than we expected
US distie arm Westcon fingered, profit to fall by $13m in fiscal '14
Enterprise tech group Datatec's share price has dived after it issued a warning that profit for this fiscal may be at least some $13m lighter than forecast, blaming distie wing Westcon US for the bottom line decline.
Group revenues for the year ended 28 February are expected to remain in line with projections of $5.6bn to $5.8bn but "softer trading" and the "impact" of an ERP roll out in Westcon North America dented income.
In addition, Datatec said a non-cash provision of up to $20m "relating to the recoverability of certain assets" at the Westcon biz across the pond was another unforeseen problem.
"This provision could reduce the group's current year's profit after tax by up to $13m," it stated, adding earnings per share could be "below previously published forecasts by at least 20 per cent".
The ERP project stateside was already fingered at the half way stage of fiscal '14 as the reasons for falling sales and this continues to be the case, "particularly in high volume transactions business as well as softer trading in some markets that have seen weaker currencies versus the dollar".
The other side of the House of Datatec, namely Logicalis and the consulting arm remained "robust", the group revealed, but this was not enough to calm the financial markets with the share price collapsing 18.5 per cent at the time of writing.
CEO Jens Montanana said:
"Notwithstanding the disappointed disappointing performance in Westcon US operations, we are confident that the issues are being addressed and our recent moves to strengthen Westcon's leadership team should quickly improve operating execution. The business remains well positioned to continue to trade successfully and regain momentum."
Westcon split with CEO Dean Douglas this month and Dolph Westerbrook rolled into town, a man that has spent the last three years as Asia Pac and EMEA president at pallet, container and crate pooling service provider CHEP.
Chief bean counter Rob Evans is to become group ops director from 1 June, and Jurgens Myburgh will pitch up as the CFO successor, joining from The Standard Bank of South Africa.
Full year results will be released in May. ®