The Data#3 Limited (ASX:DTL) share price slides on profit downgrade

Credit: Daryl Cauchi

IT services provider Data#3 Limited (ASX: DTL) was one of the worst performers on the local market on Wednesday, down 4% to $1.62, after the company released an estimate of FY18 profit.

After a streak of positive results, in December 2017 Data#3 saw its share price plunge on the news that profit for the first half of FY18 would be substantially lower than the previous corresponding period due to some project delays.

However, management was confident that a strong performance in the second part of the year would have ensured that FY18 results would have been an improvement over FY17.

Today, the company announced that the second half was indeed positive, with a record net profit before tax of $16 million. Despite this, the consolidated net profit after tax of the Data#3 group for FY18 will be down 9% from the prior year, to $14 million.

Data#3 also revealed that its subsidiary Discovery Technology has instituted a legal proceeding for debt and economic loss recovery against a client for the early termination of a 5-year supply contract that negatively impacted the results.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Data#3 Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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