Datatec reports bumper profits in half-year performance
South Africa
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23 Oct 2023
Datatec, an international technology firm listed on the Johannesburg Stock Exchange, produced a solid operational performance in the first half of fiscal year 2024, benefiting from ongoing trends in networking and cyber security.
Jens Montanana, CEO, Datatec, says the quality of earnings improved in an environment where the company’s strong growth met the challenges of higher interest rates and expanded working capital requirements.
The group revenue was $2.76 billion in the period, up by 14.7% compared to the $2.41 billion revenue recorded in the same period in 2023 financial year.
In the period under review, the group's gross margin was 15.1% (compared to 14% in H1 FY23), and gross profit was $417.9 million (up from $337.9 million in H1 FY23).
Earnings before interest, taxes, depreciation and amortisation (EBITDA) was $80.6 million (compared to $57.9 million in H1 FY23) and EBITDA margin was 2.9% (whereas it was 2.4% in H1 FY23).
Montanana says: “Westcon International delivered another excellent financial performance and continues on its growth trajectory. Logicalis International and Logicalis Latin America both achieved double-digit revenue growth over the prior year.
“We remain optimistic about our full year prospects despite uncertain political and economic challenges in many parts of the world."
He adds: “The increase in gross margin is largely due to a return to more stable foreign exchange rates, compared to half year of 2023 when the rapid strengthening of the US Dollar against the Euro and Pound Sterling during that period had a significant negative impact on gross margins in Europe.
“These negative impacts in Westcon International during H1 FY23 were partially offset by foreign exchange hedging gains, as reported in operating costs.”
On the current trading environment and outlook, Montanana says: “Demand for the group's technology solutions and services remains strong, with subsidiaries well-positioned to service customers in their respective markets across the world.
“While challenges persist, particularly in Latin America, the group continues to manage its businesses efficiently and mitigate the effects of rising interest rates through effective working capital management and minimising debt levels.
“All divisions are expecting improved performance for the full year 2024 compared to 2023. The board will also continue to focus on driving shareholder value in the context of its strategic review.”