Dimension Data, which was delisted towards the end of last year after being bought out by Japan-based NTT, for R24 billion, says revenue grew 4.7%, to $1.46 billion, in the quarter to June.
So far, for the first nine months of the year, group revenue is up 13.4% in constant currency to $4.2 billion. Product sales improved by 13.1% and services grew 13.6% year-on-year.
Dimension Data explains growth would have been higher in reported US currency due to the dollar's relative weakness during the first nine months of the year. Overall, group operating profit for the nine months improved 14.2%, to $203.7 million.
Since the company was delisted from both the JSE and London Stock Exchange towards the end of last year, it is no longer required to publish financial information.
CEO Brett Dawson says the “group achieved an excellent nine months of trading compared to the results of the IT industry in general, and the business continues to show growth from a revenue and profitability point of view over the 2010 financial year”.
In May, Dimension Data rebranded to lose its “arrogant” image and to reposition itself as a service-centric company. Dawson says its services proposition continues to gain traction in the market, and it has won several contracts in managed services and IT outsourcing.
According to global research house Gartner, worldwide end-user spending on IT services grew 3.1% to $793 million last year. “There is little doubt that the effects of the global recession of 2008 and 2009 are still very much being felt, but the market for IT services bounced back in 2010 after a 5.1% revenue decline in 2009,” says Kathryn Hale, research VP.
Internet Solutions' revenue increased 6.9%, with operating profit up 3.3%, and Plessey grew “strongly at both the revenue and operating profit level off a very low base in the prior year,” says Dimension Data.
Slower third quarter
However, Dawson says revenue growth slowed in the third quarter after a strong first half. “Close attention to margins and the cost base has driven the improvement of operating profit up 14.7% in the quarter,” he adds.
In the three months to June, Dimension Data says its services unit grew 10.9%, while product sales were mostly flat, gaining 0.2%. Its gross margin improved 1.4 percentage points to 21.5%.
Gross profit gained 12%, and the company's operating profit - 14.7% higher year-on-year, reached $74 million.
“We are investing aggressively in expanding the scope of our service offerings - both organically and through acquisitions,” Dawson adds.
During the quarter, Dimension Data bought OpSource to accelerate its cloud strategy. “Our focus on cloud services aligns to our longstanding strategy to become a services-led business,” says Dawson.
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