JSE-listed ICT group Datatec has posted a revenue decline, as key subsidiaries saw revenue drop during the financial year ended 28 February (FY25).
In its financial results published today, the company posted revenue of $3.6 billion (R64 billion), down from $3.9 billion (R69 billion) in FY24.
Revenue decreased by 8.8%, with the company explaining the dip is attributable to more software and services being net revenue accounted.
Gross profit increased by 5.6% to $910.3 million (FY24: $862.2 million). Datatec explains that the increase in gross margin is largely due to changes in the revenue mix, contributing to a significant gross profit increase in Westcon International and Logicalis International.
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 28.2% to $246.2 million (FY24: $192.1 million).
“I am pleased to report a very strong operating and financial performance across all regions and metrics for the group,” says Jens Montanana, group CEO of Datatec.
“The improving profitability and cash generation of the group’s divisions enabled us to increase our dividend payout policy to 50% of underlying earnings per share. Increasing IT complexity driven by AI [artificial intelligence] and the significant rise in interconnected digital communities is driving infrastructure demand in areas like networking and cyber security, where we have deep domain knowledge and many years of experience.”
Datatec says subsidiary Westcon International’s revenue decreased by 11.3% to $2 billion (FY24: $2.2 billion) due to changes in the revenue mix and a greater percentage of revenue being accounted for on a net revenue basis.
Westcon International’s gross profit increased by 9.4% to $441.2 million (FY24: $403.4 million), with growth in all regions and a significant increase in Asia Pacific. Adjusted EBITDA increased by 24.7% to $149.9 million (FY24: $120.2 million), as improved operating efficiencies resulted in operating expenses increasing at a lower rate than gross profit growth.
Logicalis International’s revenue went down by 5.9% to $1.2 billion (FY24: $1.3 billion) due to a revenue mix change, with more net revenue accounted software and services.
Datatec says Logicalis International saw strong gross margin improvement due to higher product margins achieved and a strong professional services margin. Adjusted EBITDA increased to $94 million (FY24: $74.1 million) as a result of restructuring activities undertaken in previous years, increased organic growth and more higher product margin transactions.
Logicalis Latin America’s revenue plummeted by 11.3% to $455.1 million (FY24: $512.9 million). The company notes this was driven by reduced volume in Brazil and a lower opening backlog. The reduced gross profit of $103.6 million (FY24: $117.9 million) and gross margin percentage of 22.8% (FY24: 23%) are a result of the decrease in revenue, mainly from Brazil.
Adjusted EBITDA improved to $20.1 million (FY24: $12.6 million). According to Datatec, this increase of 59.5% is attributed to good operating cost management and effective mitigation of the foreign exchange impact.
Datatec says it expects the trend toward higher software sales and annuity services will continue, improving the group’s margins and cash flow profile.
It notes there is continued strong demand for the group’s products and solutions, which positions it well in an increasingly complex environment.
“The board expects that all divisions will continue to improve their financial performance in the year ahead. The group will remain focused on unlocking shareholder value in the context of its strategic review,” it says.
“Notice is hereby given that the board has declared a final distribution for the year ended 28 February 2025, by way of a cash dividend of 200 ZAR cents per Datatec ordinary share payable to the ordinary shareholders, which will be in proportion to a shareholder’s ordinary shareholding in Datatec at the close of business on the record date, being Friday, 18 July 2025.”
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