Datatec ups guidance

10th Mar 2011 16:33

Information technology supplies and services company Datatec has upgraded profit guidance for the full year and said that revenue will be towards the top end of the expected range. The board expects revenues of around $4.3bn and profit after tax of some $61m in the year to 28 February 2011. That compares with guidance back in January of revenue of between $4.1bn and $4.4bn, and profit after tax of around $58m. Underlying earnings per share are expected to come in at around $0.37, versus previous guidance of $0.35, while a figure of $0.32 has been pencilled in for headline earnings per share, up from the previously indicated $0.30. The board expects to pay a dividend which will be, as usual, around one-third of earnings per share. "Given the board's preferred 3x cover, the dividend may therefore be slightly ahead of our expectations 12US¢," said house broker finnCap. "We resist tinkering with the 2012 forecasts until we have full disclosure, but this is clearly positive for the likely movement," the broker added."While there is still obvious global uncertainty, the positive trend revealed in January has evidently continued. We look forward to full results on 11 May for confirmation of the source of improvement, which we suspect is direct gross margin benefit from both revenue mix and management action regarding best use of cash for rapid vendor payment, on top of continuing stringent cost control," finnCap said, adding that this morning's "pan-territorial confidence" from sector peer Computacenter "is consistent with Datatec's optimism and underlines the return to strength of both the product and services revenue streams with identifiable technology catalysts for growth."