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Datatec plans to sell a major share of Westcon-Comstor’s operations for $800-million, and has warned that earnings will be 50% lower than last year.
The group updated a recent cautionary announcement with news of the pending sell-off, and published a trading statement about the poor earnings outlook.
The trading statement advises that underlying earnings per share, headline earnings per share and earnings per share are expected to be more than 50% lower than the prior year.
The proposed Westcon-Comstor sale is subject to contract and exclusivity provisions.
The group warns that there can be no certainty that the transaction will be completed, nor as to the precise terms on which the transaction might be completed.
Shareholders are therefore advised to continue to exercise caution when dealing in the company’s securities.
Meanwhile, underlying earnings per share for FY17 is expected to be more than 50%, or at least 16 US cents, lower than the prior year. Headline earnings per share and earnings per share are also expected to be more than 50% lower than the prior year.
The year over year expected decline in earnings is as a result of a worse than expected result in Westcon-Comstor. There was a decline in
fourth quarter financial performance in the Europe Middle East and Africa (“EMEA”) region.
Westcon-Comstor also experienced disruption to the business as a result of final stages of SAP implementation in EMEA.
However, Westcon-Comstor has made adjustments to the operating model and Datatec expects this to support a rapid recovery.