Company financials: Getronics posts profits warning

Company financials: Getronics posts profits warning

Dutch computer services company Getronics has lost almost a third of its value by mid-day trading after revising earnings forecasts for this year and the next.

Blaming "challenging conditions" in the information and communication technology services market, Getronics has warned investors that relevant markets are expected to remain flat in the first half of 2001 while companies reassess their IT needs to cater for e-business developments.

Getronics has consequently adjusted its forecasts for the full-year, anticipating earnings before interest, taxes and amortisation of "at least six per cent", some eight points off previous expectations. The margin is expected to slip further to between 5.2 per cent and 5.7 per cent in 2001. Sales for this year and the next are expected to remain steady at EUR4 billion, up from EUR3.7 billion last year.

The company says it will spend EUR20 million on the development of global programmes and e-business initiatives and an additional EUR15 million to improve its global delivery capability. Getronics has pinpointed lack of scale and geographical reach in certain key markets as a structural weakness which will be addressed by the new spending programmes; Germany and France have been identified as priorities for growth.

Steven Vrolijk, an analyst at ING Barings in Amsterdam, comments: "It seems the management isn't enough in touch with what's happening within the company and the industry. That became painfully clear during the presentations of the half-year results."

Vrolijk says he has put his hold rating for Getronic under review. "The market is still growing by 5 per cent to 10 per cent a year. We hope that next year it will be closer to 10 percent as the financial industry will step up investments again in information technology and amid an overall expected pick up in demand."

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