JSE- and LSE-listed Datatec has withstood challenging global economic conditions to report an 18% jump in revenue, to $2.3 billion, during the six-month period to 31 August.
The company's operating profit rose 12%, to $54.3 million, with EBITDA up 25%, at $76 million. Earnings per share were up 19% during the period under review, to 22.5 US cents, while cash generated from operations rose to $66 million, from $3 million year-on-year.
CEO Jens Montanana states the group's geographic diversity, global presence and improving mix of business are helping to mitigate the impact of the current economic climate.
“In all areas of our business and in each of our divisions, we have been able to mitigate slower growth in some markets with faster growth in others. Emerging and developing markets have proved resilient, with higher contributions from South America, the Middle East and Asia-Pac,” he says in a statement to shareholders.
The group reports that organic revenue growth was 9%, gross margins expanded to 13.4%, with underlying operating profits up 19% and underlying earnings per share up 19%.
“The initiatives taken to improve the group's balance of revenue and profit streams have resulted in integration solutions, services and consulting activities now accounting for 46% of the gross margin and 43% of EBITDA. In all of the group's divisions, slower growth in some markets was mitigated by faster growth in others,” the company says.
Market resilience
Emerging and developing markets have proved resilient, it adds. In particular, Brazil, Turkey, the Middle East and India are expected to continue to show strong growth in the second half.
The group says it continues to make good progress with its strategy to deliver long-term, sustainable, above average returns to shareholders by focusing on a combination of organic growth in the faster growing sectors of the ICT market, geographical expansion and earnings enhancing acquisitions.
“We are particularly pleased with the financial performance of Logicalis, where all regions contributed with increases in profits and margins. The strategically important acquisition of Promon, in South America, earlier this year, and the pre-emptive action taken last year to restructure the US operations, have been major factors in Logicalis' notable performance over this period,” says Montanana.
“The group has become more weighted to the cash generative businesses of integration services and consulting activities, which now account for over 40% of the group EBITDA. This change, together with tight cash management across the group, has resulted in a substantial improvement in operational cash flow during the first half of the year.”
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