October 17, 2018 / 11:31 AM / a month ago

IT firm Softcat says growth won't match 'exceptional' 2018, shares fall

LONDON, Oct 17 (Reuters) - Shares in Softcat fell 10 percent on Wednesday after the British IT company said growth this fiscal year would not match levels seen in the year to the end of July, when its revenue rose 30 percent to top 1 billion pounds ($1.3 billion).

The IT infrastructure products and services group, which floated three years ago, reported revenue of 1.08 billion pounds for the 12 months to the end of July, while adjusted operating profit jumped 37 percent to 70.5 million pounds.

Chief Executive Graeme Watt said Softcat was benefiting from demand for hybrid cloud computing, which is a mix of private and public cloud services, as well as increased digitalisation in businesses and security solutions.

He said many of the trends would continue in the year ahead, but the “exceptional market conditions” seen in 2018, which saw a resurgence of demand for servers, for example, would not be repeated.

“It was a combination of some of the shackles, if you like, coming off IT spending last year compared to quite a tough compare the previous year in 2017,” he said in an interview.

“Those sort of growth rates in the market aren’t sustainable year-in, year-out.”

He said trading in the first 10 weeks of the year had been “encouraging”, and the group was confident of achieving further profitable growth in 2019.

Shares in Softcat, which have more than trebled since the company listed in November 2015, were trading down 10 percent at 713 pence in morning deals on Wednesday.

Analysts at Investec, who have a “hold” rating on the stock, said the cautious outlook was “understandable and sensible” considering potential risks such as Brexit and trade tariffs and limited visibility at this stage of the financial year.

$1 = 0.7613 pounds Reporting by Paul Sandle; Editing by Mark Potter

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