Datatec attributes double-digit rise in earnings to turnaround strategy
Companies / 4 October 2019, 1:30pm / Sandile Mchunu
DURBAN – Information and communications technology group Datatec said the turnaround strategy it implemented over the past two years was the reason for the double-digit rise in earnings for the six months to the end of August.
Datatec said on Thursday that the strategy had seen it increasing its underlying earnings per share (Eps) by between 39 and 53 percent.
They were expected to be between US5 cents (R0.76) and US5.5c a share, up from US3.6c last year, on the back of contributions from all its divisions and the reshaping of Westcon International.
The group said its efforts to reduce central costs were also proceeding according to plan.
Datatec predicted last year that Westcon International would become profitable from early 2019.
In October, Datatec flagged that it returned to profitability in the six months to the end of August 2018. It reported a profit of $6.6 million after a $29.4m loss in the prior year, following the sale of Westcon Latin America for $800m and 10 percent of Westcon International for $30m to Synnex Corporation in 2017, in a move to restructure the business.
The group said it increased its revenue by 10.4 percent to $4.33 billion during the period.
Earnings before interest, tax, depreciation and amortisation surged to $86.8m from $26.7m the prior year.
The group said yesterday that its operations achieved a solid performance in the first half of the financial year 2020 despite economic and currency headwinds.
“All of the group’s divisions delivered strong results, with the reshaping of Westcon International and associated central cost reductions proceeding according to plan,” it said.
It said headline earnings per share would increase by more than 100 percent to between 2 and 2.5 US cents from 0.7 US cents last year.
The group operates three divisions: Logicalis, Westcon International, and consulting and financial services.
Logicalis Group has a global footprint, with operations in Europe, North America, Latin America, Asia Pacific and Africa.
In July, Logicalis SA acquired Mars Technologies as part of an ongoing strategy to augment its solutions and services business in South Africa.
In last year’s results, Logicalis Group contributed 39 percent to the group’s overall revenue, Westcon International contributed 60 percent, and consulting and financial services contributed 1 percent to its revenue.
Datatec was expected to release its results next month. Its shares declined 1.33 percent to close at R32.65 on the JSE on Thursday.