Datatec has published an interim management statement, for the period from 1 September 2012 to 31 December 2012, warning that performance for the financial year will be lower than originally forecast. 
Group revenues for the financial year are expected to reach approximately $5,4-billion (2012: $5-billion) including 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 $80-million to $90-million (2012: $89-million).
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 unlikely to reach that of last year (2012 earnings per share: 43,5 cents; 2012 headline earnings per share: 43,1 cents), but are expected to be in excess of 35 US cents.
The lower end of all the ranges outlined above is more than 20% below the previously published forecasts.
The group 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), making a distribution of approximately 17 US cents per share in total for the year ending 28 February 2013, up from 16 US cents in 2012.
Since the Group’s 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 Logicalis continues to perform strongly and in line with expectations.
The group’s gross margin expansion has continued in the second half and overall Latin America once again is the strongest market. It continues to operate with comfortable head room against its working capital lines.
“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,” says Datatec CEO, Jens Montanana.
“Latin America, the Middle East, Africa and Asia remain the best performing regions. Westcon’s performance in North America and Europe has been weaker than expected whilst Logicalis has performed robustly in both of these regions.”
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 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 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.
Analysys Mason is expected to report a solid year whilst other businesses in this division have experienced weaker trading conditions in the second half.