The second half of its financial year is looking much better than the first half, says JSE- and London-listed Datatec.
The company this morning issued its update for the first four months of the second half. Trading between September and December saw the company move back into a position of revenue growth at all its units.
CEO Jens Montanana says the company is now benefiting from the reduction in operating costs it implemented a year ago. This has resulted in even slight revenue increases flowing through to the bottom line.
Datatec says the early signs of improvement it saw at the end of the second quarter have continued into the second half of the current financial year. Overall gross margins have remained stable.
However, despite the improvements, Datatec is sticking to its full-year revenue expectation of between $3.7 billion and $4 billion, profit after tax of about $44 million, and headline earnings per share of about 23 US cents.
Montanana says the company is pleased with the revenue growth, and “cash generation remains strong and margins are steady”.
He adds that even hard hit markets, such as the US and Europe, seem to be turning the corner, and the US is expected to become the biggest growth driver for the group's Westcon division.
Westcon's good financial performance during the first half of the current financial year is continuing to improve slowly. Third quarter revenue showed sequential growth over the first two quarters, and the company has stable margins and improved profitability.
Logicalis also saw trading improve, although it is still lagging the recovery of the other business units, says Montanana. However, it now appears to be heading towards improved revenue.
Logicalis is expected to produce a better second half performance in the current financial year than the first half. It will also benefit from the conclusion of the $19.8 million NetStar Group Holding deal. Datatec expects to wrap this up soon.
The Consulting Services division is also expected to have a much better second half after a difficult start to the financial year.
Datatec is expected to release its results for the year to February on 13 May. Its shares opened at R27 and moved 30c higher in early morning trade today.
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