In a trading statement a couple of weeks before it announces annual results for last year, Datatec, the holding company behind distributor Westcon and integrator Logicalis, has warned of mixed global economic conditions and a currency headwind.
As a result, it says, Group revenues for FY16 are expected to be $6.5 billion, which is in line with the prior year, but costs have risen.
It now expects earnings before interest, taxation, depreciation and amortisation in H2 FY16 to be marginally above H1 FY16. But EBITDA in FY16 is expected to be approximately 22% below the $206.4 million for FY15.
Group gross margins have improved in H2 FY16 and are expected to be approximately 13.5% for FY16, up from 13.1% in H1 FY16, however.
As anticipated, operating profit in FY16 was impacted by the strength in the US dollar (reporting currency), ongoing restructuring in Westcon EMEA and Logicalis UK and foreign exchange losses, particularly in Angola.
The Group has increased its provision against trade receivables to reflect the weaker economic conditions in some markets.