Datatec group returns to profitability
Chief executive Jens Montanana said the group delivered on the commitments set last year, resulting in a much improved financial and operational performance across all divisions.
“Logicalis produced strong results, despite emerging market currency headwinds, especially in its key Latin America region. Westcon International’s recovery is now established, having met the principal objectives around shared services and central cost reductions, with further improvements expected,” Montanana said.
Montanana added that building on the successful turnaround of financial year 2019, they were confident that their operations are well positioned to improve their performances further and support its group strategy.
The group yesterday reported underlying earnings per share of 6.6 US cents, (R0.85) recovering on last year’s loss of 17.2 US cents.
Revenue increased by 10.4percent to $4.33 billion (R61.62bn), up from $3.92bn, while earnings before interest, tax, depreciation and amortisation (Ebitda) surged to $86.8million, compared to last year’s $26.7m.
The group said its division, Logicalis, the largest profit contributor to the group, delivered a strong performance, while executing on its strategy, with revenue up by 11.3percent to $1.7bn and Ebitda increased by 8.4percent to $93.4m. Its other business Westcon International saw its revenue increasing by 9.8percent to $2.54bn, supported by higher revenues in Europe and Asia-Pacific.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the results had continued to improve and the loss-making Westcon International division had returned to profitability, although it was still far from its normalised profitability.
“The group still has more than R350m to buy back its own shares and we expect them to continue to buy back. The long awaited additional earn-out payment from Synnex appears to be nearing resolution and that could result in a special dividend or further share buybacks this year. Overall it appears the turnaround of Datatec is continuing to gain strength and profitability should continue to improve significantly from current levels,” Takaendesa said.
During the year Datatec undertook three general share repurchases under separate shareholder mandates provided at a general meeting on July 24, at the AGM on September 20 and at a general meeting on January 15.
“These repurchases amounted to $43.9m and totalled 23.8million shares which have been cancelled, reducing the company’s shares in issue to 219.2million at the end of February,” the group said. Post-year end the company repurchased a further 3.1million shares at a cost of $6.9m.
Datatec shares closed 0.47percent higher on the JSE yesterday at R32.15.