JOHANNESBURG - South Africa’s Investec said on Friday that its full-year profits would drop by up to 23%, with coronavirus expected to deal a further blow to the firm already struggling with tough market conditions.
The financial services group said its adjusted earnings per share, which reflect profits made in the course of its ordinary operations, would be between 16% and 23% lower in the year to March 31.
Investec had already been hurt by factors including lacklustre growth in South Africa, which tipped into recession in the final quarter of 2019, and Britain’s departure from the European Union, with its UK specialist banking arm in particular struggling.
It said these difficult conditions had been exacerbated by the impact of the outbreak of coronavirus, which was expected to have a further impact on its fourth quarter performance.
Its South African listed shares, which have in recent days taken a beating amid global market turmoil and following the suspension of its 10% stake sale in spun-off asset management arm Ninety One, were up 13.57% by 0722 GMT.
The shares of Investec plc and Investec Ltd plunged more than 49 percent on Tuesday following the completion of the Ninety One demerger in line with a 11.64 percent decline in the JSE All Share Index.
Investec plc shares fell to R36.61 a share on Monday afternoon from Friday’s close of R64.57, while Investec Ltd dropped to R37.66 from R64.99 recorded on Friday.
Vestact portfolio manager Michael Treherne said the drop was a direct result of the Ninety One spin-off.
Treherne said while the stock fell, they were bound to bounce back to add back the value of those new shares to get the true price of Investec.