Former Altron subsidiary Bytes saw almost a third of its value wiped out in the stock market on Wednesday as the technology group issued a profit warning for the financial year due to reduced tech spending by corporate customers.
Bytes Technology Group said it expected first-half gross profit to be at a similar level to last year’s and operating profit to be marginally lower, followed by more normalised growth in both metrics in the second half.
In a statement before the group’s AGM on Wednesday, CEO Sam Mudd said that in recent weeks the group had navigated a more challenging macro environment.
She said trading in the first months of the year was affected by the environment, leading to some deferral of customer buying decisions, particularly in the corporate sector.
This business is important for Bytes. The group is the biggest reseller of tech giant Microsoft’s products in the UK and is chasing a market of 42,000 private sector companies, which collectively spent about £105bn on IT in 2019.
The group, which is listed in London and Johannesburg, serves 6,000 corporate and public sector customers, many of which have had long relationships with Bytes.
The dip in spend was compounded by the near-term effect of transforming its corporate sales team.
“While this has affected trading, our value proposition remains strong. We’re seeing continued engagement, a healthy pipeline and remain confident that as these sales team changes bed in, we will be a stronger business, better aligned to meeting our customer needs and drive sustainable growth,” Mudd said.
Spooked by the profit warning, shares in the UK firm fell 29.46%, trading at their lowest levels since April 2023. The stock closed at R85.52.
This is likely driven by an expectation that Bytes will not achieve its full-year guidance of double-digit gross profit growth and “high single-digit” operating profit growth in financial year 2025/26.
The group, which is a software, security, cloud and AI services specialist, indicated at its final results that it had evolved its corporate sales division, shifting from a generalist model to specialised, customer-segment-focused teams, in line with its commitment to customer centricity.
“While this transition has resulted in a longer than expected readjustment period, it positions us to deliver more relevant solutions and drive sustainable services annuity income growth during the second half of the financial year ending February 28 2026 and beyond,” the group said.
For the six months ended August 2024 the group reported gross profit of £82.1m and operating profit of £35.6m.
Update: July 2 2025
This story has been updated with new information.
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