Datatec has reported strong annual financial results for the year ended 28 February, with gross invoiced income rising 9.3% to $8.5 billion (R139 billion) and gross profit increasing 9.6% to $997.8 (R16.3 billion).
The JSE-listed technology group also posted a 17.8% increase in adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to $290.1 million (R4.7 billion), while headline earnings per share climbed 56.5% to 39.9 US cents. Underlying earnings per share rose 35% to 48.2 US cents (R7.84).
Datatec increased its total dividend per share by 55% to 24 US cents (R3.92), while return on invested capital improved by 510 basis points to 21.6%, reflecting stronger profitability and operational performance across the group.
In a statement today, Datatec says the results were boosted by continued margin expansion and a strong profit-growth trajectory in Westcon and Logicalis International, while Logicalis Latin America achieved good traction in its turnaround.
According to the firm, the proportion of higher-margin software and services continued to expand, now comprising over 70% of gross invoiced income.
It notes that this is fuelled by artificial intelligence (AI), which is driving increasing complexity within IT environments, requiring a growing reliance by businesses on specialised service providers with deep domain expertise.
Disciplined cost management has improved operating leverage and profitability, says the firm, adding that strong operating cash generation has resulted in a substantial reduction in net finance costs across the group’s core divisions and a greater quality of earnings.
Jens Montanana, chief executive of Datatec, comments: “We are celebrating one of the strongest years in the Datatec Group’s history, underpinned by excellent execution, financial performance and operating leverage. Solid profit growth has driven a 55% increase in the total dividend to 24 US cents.”
Datatec’s Westcon International division increased gross invoiced income by 9.6% to $5.744 million. Westcon’s gross profit rose 13.1% to $499.2 million, driven by increased demand for cyber security and network infrastructure across all geographies.
Gross margins increased to 25.8%. Adjusted EBITDA increased 15% to $172.4 million, demonstrating good operating leverage, says the firm, noting that recurring sales now contribute 68% of total sales in this business.
Logicalis International grew gross invoiced income by 11.8% to $2.148 million due to strong order intake and growth in multi-year contracts.
The company points out that all regions generated good momentum, and recurring gross invoiced income has expanded to 63% of total income.
Gross profit grew by 8% to $385.9 million. Operating efficiencies drove higher conversion of gross profit into adjusted EBITDA, which increased by 21.8% to $114.5 million.
Logicalis Latin America delivered a considerably improved financial performance, underpinned by gross margin improvement, effective operating expense management, and reduced finance costs on the back of a large increase in net cash.
While gross invoiced income was marginally lower at $524.9 million, the company notes gross profit grew by 1.4% to $105 million and adjusted EBITDA by 20.9% to US$24.3 million.
“Despite geopolitical tensions and energy constraints causing supply chain volatility, trading to date has remained resilient. We expect continued improved financial performance in FY27,” Montanana concludes.
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