'Painful times' for Datatec as Westcon struggles

Distributor arm proves troublesome child for parent company

Revenue for Westcon in Europe has dragged down the outlook of parent company Datatec.

Datatec stated that consolidated revenue for H1 FY18 is expected to be $2.9bn (£2.3bn), compared with $3.0bn in H1 FY17. First-half underlying EPS will slump 84 to 92 per cent to between one and one US cents for the six months ended 31 August 2017. Headline loss per share will be between five and six US cents, down from 9.1 US cents in the comparable period last year.

"It's painful times for Datatec," said Kate Hanaghan, chief research officer at TechMarketView.

"The primary root cause of this performance was the Westcon subsidiary, which continued to experience disruption 'as a result of the final SAP implementation in EMEA'. Additional headwinds came in the shape of finance charges, amortisation expense and effective tax rate - all of which were higher than last year."

Hanaghan stated that revenue for Westcon in Europe was down $30m to $730m for the period.

Elsewhere in the group, reseller and services provider Logicalis delivered revenues of $694m - down from $757m - and flat gross profit.

"There was no detail in today's trading update on Europe or the UK specifically, but we may learn more once the full H1 results are out in November," added Hanaghan.