JSE-listed information and communication technology group Datatec’s shares dropped by 12.72% after the company predicted a 51% drop in headline earnings a share to 18c, from the 37c initially reported for the period.
Underlying earnings a share was expected to be about 31c for the period – 26% lower than the 41.8c reported the previous year.
The company also expected its 2016 rnings before interest, taxes, depreciation and amortisation (Ebitda) to be 22% below the $206.4-million earned in the previous year, reporting a marginally higher Ebitda in the second half of the 2016 financial year than that of the first half of the year.
Group revenue for the year was expected to be $6.5-billion, which was in line with the previous year’s revenue, while group gross margins improved in the second half of the year and were expected to rise by 0.4 percentage points to 13.5%, up from 13.1% in the first half of 2016.
Datatec that its operating profit was impacted on by the strength in the US dollar, as well as by ongoing restructuring in Westcon EMEA and Logicalis UK. Foreign exchange losses, particularly in Angola, also affected the group’s bottom line.
Datatec noted that restructuring actions were expected to deliver operating improvements, while mitigating actions in Angola had already taken effect.
The group expected to have an abnormally high effective rate of tax as a result of the foreign exchange losses in Angola and trading losses in other areas, for which no deferred tax asset was recognised at the year end.
Datatec’s share price dropped to R45 a share on Tuesday, down from from R51.56 a share at the close of the previous day.