Econocom's share price tanks following profit warning

Belgian reseller expects operating profit to plummet 43 per cent in H1

Econocom's share price has fallen by more than a third over the last five days, as investors respond to a profit warning issued by the reseller on Friday.

Share value for Econocom Group SE plummeted by 36.82 per cent since the beginning of trading on 3 July. The tailspin was sparked after the firm posted its preliminary H1 results last week, which made grim reading for investors.

H1 2018 recurring operating profits are expected to slump 43 per cent to €33m year on year - well short of market expectations of €57m.

In a statement, Econocom CEO Robert Bouchard put the weak results down to a slower leasing business, "a low point" in profitability for its French market, €10m in provisions for "dispute and risk contracts" and €20m in restructuring efforts.

It's almost four months since Bouchard took over as CEO from his father Jean-Louis Bouchard.

"We have already decided to implement an action plan designed to reduce costs across the group and across all our business lines," he added.

"These decisions will affect our short-term profitability but will enable us to achieve the ambitions of our strategic plan, which are to generate strong growth and a significant improvement in our profitability."

However, it is not clear when the improvement will take effect.

Econocom has also revised down its expectations for the second half of the year. FY2018 annual operating profits are now forecast to be €120m, down from €154m in 2017.

The 20 per cent slide is also lower than previous market expectations of €160m for Econocom's FY2018.

Meanwhile, the Belgium-based VAR's complete first-half results will be published on 19 July.