File photo: INLSA
File photo: INLSA

Datatec rises on predicted surge in profits

By Sandile Mchunu Time of article published Mar 23, 2020

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DURBAN - Datatec's share price leapt by more than 45percent on the JSE on Friday after the information and communications technology (ICT) group said it expected all its divisions to report a surge in profits for the year to the end of February.

The group said in a trading update that it was in the process of finalising its results for the year to the end of February, and it had achieved a solid financial performance in all of its divisions.

“The turnaround in Westcon International continued with a substantial improvement in profitability in the financial year to end February 2019. Logicalis is also expected to produce a strong result, especially in its Latin America region. Analysys Mason had another growth year, with much improved profitability,” the group said.

The share price responded positively to the trading update and surged to R26.80 a share, up from Thursday’s closing price of R18.25. It closed at R26 on Friday.

Last year, Westcon International benefited from the turnaround strategy as it reported earnings before interest, tax, depreciation and amortisation (Ebitda) of $5.6 million (R98.40m), recovering from a loss of $48.1m a year earlier, while Logicalis increased its Ebitda by 8.4percent to $93.4m.

The group said its balance sheet remained strong and was expected to report a reduction in net debt at the end of February compared to its net debt reported in the half-year results at the end of August. The group reported a net debt of $193.7m at the end of August.

The group also expected a solid performance in the next 12 months.

“For the first few weeks of financial year 2021 to date, order intake for Westcon has been ahead of this time last year, while in Logicalis order intake for March is expected to be ahead of March last year. So far we have experienced limited supply chain interruptions. We are seeing increased demand for our remote access computing, security and collaboration networking solutions,” the group said.

Datatec has warned about the Covid-19 outbreak, which has impacted its operations. “The Covid-19 virus outbreak has very rapidly spread across the globe in recent weeks and into every region where Datatec operates. We are continuing to take appropriate action to ensure the safety of all our employees and customers, in addition to following the World Health Organisation and local country and government guidelines,” it said.

The group has closed a number of offices and it has encouraged most of its employees to work remotely where possible.

“Across the group, employees are equipped with the necessary technological tools to work effectively from home. Our warehouses are still functioning with new protocols for care and safety of our people,” the group said.

BUSINESS REPORT 

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