Datatec on stable path despite FIFA World Cup impact

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“We have delivered revenue growth and margin improvements in mixed trading conditions across the Group,” said Jens Montanana, chief executive of [DATA DTC:Datatec Limited]

Logicalis experienced a reduction in server and storage product sales particularly in the United States and the United Kingdom, largely due to delays as a result of the FIFA World Cup in Brazil.

(READ MORE: Logicalis posts a drop in revenue due to FIFA World Cup)

For the six months ended 31 August 2014, group revenue however increased by 7.9 per cent to three billion US dollars, reflecting a 14.3 per cent hike in Datatec’s subsidiary, Westcon’s revenues partially offset by a 6.9 per cent decline in Logicalis.

Developing markets outside of North America and Europe generated 37 per cent of group revenue and 45 per cent of gross profit, compared with 39 per cent of revenue and 44 per cent of gross profit in the 2013 financial period.

Westcon’s revenues grew across all regions, particularly in North America where sales increased by 26.8 per cent.

“Westcon’s return to a growth trajectory has been very encouraging with recovery in market share and sales volumes in North America following successful resolution of the ERP transition issues. We have also seen strong growth in our security practice globally,” added Montanana.

The group’s gross profit grew by 7.9 per cent to 446.2 million US dollars while operating costs were up 9.8 per cent to 356.1 million US dollars.

The group’s EBITDA margin declined slightly from 3.2 to 3 per cent due to Westcon’s growing profits. EBITDA overall was 90 million US dollars.

(READ MORE: Datatec reports minimal growth in second half of FY )

Operating profit was lower at 65.7 million US dollars, compared to 67 million US dollars in the first half of 2014 while headline earnings per share were also declined from 18.2 cents to 16 cents.

An interim distribution of eight US cents per share was maintained.

Datatec said prospects for global growth in the ICT sector remains varied due to challenges in certain geographic and product areas, with conditions in the Us and Europe set to improve while the Australian market remains weak.

Despite the slowdown of the FIFA World Cup in Brazil, the group expects Latin American markets to remain robust.

(READ MORE: Datatec revenue flows due to its Logicalis business )