Dual-listed Datatec's Westcon unit will divest from its current India venture and discussions with partners have started.
The company this morning issued a revised trading update for the year to February. It says it has reviewed Westcon's India operations and decided to sell out. The investment to date is not significant to the group, it notes.
"Datatec has been reviewing its venture in India for the last year and has decided for various reasons that the current structure cannot provide the operational certainty required by the business," says Datatec CEO Jens Montanana.
Datatac, which expects to publish its results on 15 May, says revenue should come in between $5.2 billion to $5.3 billion, slightly lower than its previous estimate of about $5.4 billion.
Profit after tax is expected to be in the range of $83 million to $88 million, instead of the previous guidance of between $80 million to $90 million. Underlying earnings per share should come in between 40c and 45c instead of 40c to 47.9c.
Datatec adds that it expects to maintain its distribution to shareholders, through a final capital reduction out of contributed tax capital in lieu of a dividend, at 9c, which is the same level as last year.
Since the January statement, in which it provided the previous guidance, Westcon has continued to report performance below expectations especially in the US and Europe. In contrast, Logicalis continues to perform strongly and slightly above plan, says Datatec.
Datatec says its gross margin expansion continued throughout the year and Latin America has again proved to be its strongest market.
Underlying earnings per share excludes goodwill and intangibles impairment, amortisation of acquired intangible assets, profit or loss on sale of assets and businesses, fair value movements on acquisition-related financial instruments, and unrealised foreign exchange movements.
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