Datatec issued a profit warning this morning as it admitted the performance of its for-sale distribution arm, Westcon, has been hit for six by an SAP roll out.
Having warned in April that underlying earnings per share for its fiscal 2017 would more than halve, Datatec has dropped the bombshell that it now expects the number to be 66 per cent behind the previous year.
The announcement knocked seven per cent off its shares.
Datatec laid the blame firmly at the door of its distribution arm Westcon, or Westcon-Comstor as it has taken to calling it since it began negotiations to sell it.
Various names, including Arrow, Synnex and - most recently - ALSO, have been linked with Westcon-Comstor in recent weeks, but sources told us that the ill effects of the SAP roll out had devalued the business in the eyes of suitors, at least in the short term.
Westcon-Comstor's global sales fell by seven per cent to $4.53bn with the majority of the damage being done in EMEA, where sales plunged by $263m to $864m, a whopping 30 per cent slump.
"Europe went live on SAP during November 2016, resulting in transitional challenges and delayed financial reporting, exacerbated by the business process outsourcing in that region," Datatec stated.
"Trading conditions in MEA were weak, resulting in a poor performance across the region, with additional receivables write-offs in Africa and the Middle East."
Datatec's other main arm, integrator Logicalis, performed in line with expectations for the year, Datatec added.
Johannesburg- and AIM-listed Datatec gave no update on the possible sale involving Westcon-Comstor, other than to repeat that there can be no certainty that the transaction it is negotiating will be completed.
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