Datatec reports big drop in profit after challenging year

Listed ICT group Datatec has reported a drop in revenue and profit for the full year ended February 2017, following what it described as a very challenging year.

The group reported a decline in earnings and profit, to $6.08 billion (FY16: $6.45 billion) and $10.75 million (FY16: $48.48 million), respectively.

No dividend was declared.

Overall operating costs were $714.2 million (FY16: $706.6 million). Included in operating costs are total restructuring costs of $16.6 million.

Ebitda was $118.9 million (FY16: $162.1 million) and ebitda margin was 2.0% (FY16: 2.5%).

The group said its trading was materially affected in the last quarter by the roll out of the SAP ERP system and business process outsourcing (BPO) across Westcon-Comstor’s operations in EMEA and Asia-Pacific.

These operations saw revenue decline $338 million year on year to $6.08 billion from $6.45 billion, Datatec said.

Speaking on the results, Datatec CEO, Jens Montanana, said that the company’s year ended with a very challenging set of circumstances with Westcon-Comstor’s SAP and BPO implementation.

“(However), Logicalis’ performance was satisfactory with a continuing trend towards a higher margin services business,” he said.

“The strategic value of our businesses is affirmed by the unsolicited approach for a major share of Westcon-Comstor’s operations.”

Datatec is currently in talks over a possible sale of a major share of Westcon-Comstor’s operations for a consideration of more than $800 million, it said, which would boost the company’s future financial performance.

However, this deal is still subject to ongoing negotiations, the company noted.

“There can be no certainty that the transaction will be completed, nor as to the precise terms on which the transaction might be completed. Shareholders are therefore advised to continue to exercise caution when dealing in Datatec’s securities.”

Read: Datatec acquires US firm for R528 million

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Datatec reports big drop in profit after challenging year