Datatec dives to six-year low on currency woes

The Johannesburg- and London-listed company said revenue grew 1.8% to $5.5bn in the 10 months to 21 December, compared to the same period last year.

This implied annualised revenue of $6.6bn, slightly short of full-year expectations of $6.9bn, while group gross margins were 13.3%, up from the first half of the year but down on the prior year's 13.8%.

Reminding of its operations in more than 60 countries, Datatec said the significant strengthening of the US dollar and the slowdown in emerging markets had combined to reduce the contribution of emerging markets operations to group results.

While growth in the US and Europe had been resilient compared to the equivalent period in 2014. the dollar's strength and the costs of on-going restructuring would continue to constrain underlying operating profit growth.

As indicated in the interim results, group EBITDA excluding foreign exchange was expected to show a "modest sequential improvement" in the second half of the financial year.

The board expected to maintain the full year dividend in line with previous years.

Broker FinnCap said the modest improvement in EBITDA implied a downward revision to full-year forecasts.

Shares in Datatec were down 14% to 165p in early trade, before recovering to 179.07p by mid afternoon.