Companies / 18 October 2019, 3:00pm / Sandile Mchunu
DURBAN – Datatec continues to benefit from the successful restructuring of its subsidiary, Westcon International, as the JSE-listed information and communications technology (ICT) group's earnings surged by 64.32 percent in the six months to end August.
Earnings before interest, tax, depreciation and amortisation (Ebitda) increased to $70 million (R1.04 billion) for the six months to end August, up from $42.6m compared to last year.
Westcon International, a once loss-making subsidiary, contributed $19.1m to the group's Ebitda.
This comes after Datatec sold its Westcon Americas and 10 percent of Westcon International to Synnex Corporation for $800m and $30m, respectively in 2017.
However, the group said its other major subsidiary Logicalis remained its biggest contributor to its profitability.
Chief executive Jens Montanana said all divisions delivered solid operational performances during the first half of the year in the context of continuing global macro-volatility.
“Logicalis Latin America performed very strongly, despite currency translation effects and Westcon International improved profitability across all regions in line with its turnaround objectives. Our consulting business delivered an excellent performance as the adoption of new technologies, including 5G, accelerates internationally,” Montanana said.
The group also spent $19.5m in share buyback and paid a dividend of $15.4m to its shareholders during the period.
“We continued to return cash to shareholders during the period through a special dividend and ongoing share buy-back programmes. Looking ahead, despite growing uncertainties globally, we remain confident that the improvements in both the operational and financial performance of the group will continue for the remainder of the year,” Montanana said.
Logicalis delivered a strong performance supported by a significant multi-year project in Latin America. Its revenue remained stable while gross profit increased by 12 percent and its Ebitda increased by 45 percent to $56m.
Its other smaller division, Corporate, Consulting and Financial Services reported an 118.18 increase in Ebitda to $4.8m.
The group revenue increased by 2.6 percent to $2.06bn. However, in constant currency basis, group revenue increased by 8.2 percent.
Operating profit increased by 41.08 percent to $34m, while underlying earnings per share increased by 47.22 percent to 5.3 US cents (R0.79) a share in the first half and earnings per share increased by 314.29 percent to 2.9 US cents.
Going forward, the group said despite ongoing uncertainties and complex geopolitical issues, the board remained confident that it would deliver an improvement in its operational and financial performance compared to the prior financial year.
“Logicalis’ financial performance is expected to be maintained throughout the rest of the financial year 2020, although currency translation weakness, especially in Latin America, may impact its results. Westcon International has a solid base to support its growth following disruptions over the past few years,” the group said.
Datatec shares closed 1.60 percent higher at R32.30 on the JSE on Thursday.