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Datatec reports 'good' revenue growth

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 30 Jul 2015
The group delivers sustainable revenue growth as a result of its international scale and operational diversity, says Datatec CEO Jens Montanana.
The group delivers sustainable revenue growth as a result of its international scale and operational diversity, says Datatec CEO Jens Montanana.

Multinational ICT group Datatec today reported good revenue growth of 18.2% for the period 1 March to 30 June, compared to the four months ended 30 June 2014.

The group says its Westcon business continues to report "excellent revenue growth, particularly in North America". Logicalis also delivered revenue growth in relation to the comparable period in a challenging market.

The company reports gross margins have been lower across both divisions, notably in developed markets, where product sales have increased on the back of a number of large volume deals.

Growth in emerging markets has been affected by the sustained strength of the US dollar, while group operating margin improvement from increased revenues and cost containment initiatives has been offset by restructuring expenditure and foreign exchange losses.

"We have continued to deliver sustainable revenue growth as a result of our international scale and operational diversity," says CEO Jens Montanana.

"Westcon is contributing strongly to FY16 growth and continues to make progress in improving operating efficiency, although the division was impacted by foreign exchange losses. Logicalis continues to adjust to changing market conditions and is addressing business structures to improve its market positioning and operating efficiency."

Restructuring

The company reports Westcon will restructure its Europe, Middle East and Africa operations in the second half of FY16, aimed at delivering future improvements in operational efficiency through the creation of a shared services function.

"The extent of the restructuring, as well as its anticipated cost, is in the process of being finalised and will be communicated with the interim results in October," says the group.

"The imposition of capital controls at the end of 2014 in Angola, and the recent devaluation of the kwanza, has resulted in foreign exchange losses in that market. A series of actions have been instituted to reduce the exposure and limit the losses. Total current assets in Angola at 30 June 2015 were $51 million."

Datatec says Logicalis reported revenue growth of 14.7% over the comparable period, but gross margins have come under pressure due to a small number of high volume transactions, in particular in the US, and lower services margins.

"EBITDA increased strongly due to operating leverage in contrast with the lower performance in the comparable period," says the company.

Datatec notes Logicalis yesterday conditionally agreed to acquire Advanced Technology Integration Group, a solution provider offering system integration and professional services to enterprise and commercial customers across the Midwest region of the US, for up to $42 million.

"The acquisition will consolidate Logicalis' presence in the key Midwest region and present significant cross-selling opportunities for its services offering."

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