Dimension Data`s share rose by 15c or 4.5% to close at 345c on the JSE yesterday after the group reported a turnaround at operating profit level.
The group`s September year-end results showed an adjusted operating profit of $33.01 million, which compares with a loss of $9.01 million the year before.
Total turnover for the period was $2.48 billion, up from $2.1 billion, while adjusted earnings per share of 0.9c compares with a previous loss of 2.7c.
An analyst says he is encouraged by the results, although he believes the group still faces some challenges.
"The operating margin is still very low, so they are really going to have to get that up. There also seems to be a lot of competition now, so things are looking interesting," he says.
"We entered the year against the backdrop of turnaround strategies in no less than five geographies," says Dimension Data CEO Brett Dawson. "2004, for us, has been primarily about returning this group to profitability."
The group also invested in growth and has expanded market share, grown the contribution from the solutions lines of business and controlled costs.
On a constant currency basis, revenue in North America climbed by 29% while an operating profit of $3.5 million compares with a loss of $13.6 million. In Europe, revenue was up 7% and an operating profit of $7.4 million was up on a previous $6.7 million.
UK revenue was up 11% and the operating profit rose from $9.5 million to $12.7 million.
The African operations recorded an 8% increase in revenue with an operating profit of $25.9 million against $1.3 million last year. Asian revenue was up 10%, with an operating profit of $6.9 million compared with $2.2 million previously.
Australian revenue was up 16% while the operating profit increased from $13.5 million to $14 million. Australia was the only region where growth in overheads outstripped revenue growth. Dawson says this is mainly because of investment in the managed services offerings in the region.
Dawson says the strategy for the year ahead is to grow revenues and improve returns. The group plans to increase the contribution from the solutions business, control overheads further and achieve "operational excellence".
He says the market environment is "stable to optimistic" but adds that it is a competitive environment. The market is still subject to global macroeconomic uncertainties, but Dimension Data is well positioned for growth.
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