Diversification sees Datatec push for double-digit growth
Based on current trading conditions and prevailing exchange rates, Datatec chief executive, Jens Montanana says that the group’s revenue target of US5.5 billion for the 2013 financial year will mean double digit growth.
The CEO added that Datatec would also look to increase its capital distribution with security, unified communications and data centre infrastructure the key solution drivers for growth.
Datatec anticipates underlying earnings per share of approximately 55 US cents, from 47.9 US cents before.
The JSE listed firm reported on Wednesday (16 May) a 17% rise in revenue for the year ended February 2012, to $5.03 billion, from $4.3 billion before.
The ICT networking and related services firm recorded an operating profit of $150.64 million, from $104.98 million.
EBITDA improved 34% to $190.2 million, while cash generated from operations grew to $102.8 million, from $64 million in 2011.
The group announced capital distributions of 16 US cents per share (R1.31) for the year, from 13 US cents in 2011, including a final distribution of 9 US cents per share (RSA 75c).
Speaking in a teleconference, Montanana said the board expects revenues for the 2013 financial year of between $5.5 billion and $5.8 billion, representing growth in excess of 10%.
Westcon, a specialty distributor in networking, security, mobility and convergence for leading technology vendors, accounted for 74% of the group’s revenues (2011: 74%) and 64.9% of its EBITDA (2011: 66.3%).
Logicalis, the IT solutions and managed services provider with expertise in IT infrastructure and networking solutions, communications and collaboration, data centre and cloud services, and managed services, accounted for 25% of the group’s revenues (2011: 24%) and 32.8% of its EBITDA (2011: 33.4%).
North America remains the group’s largest market, “and while trading in that geography remained challenging, it continues to show signs of recovery,” it said. Montanana said that revenue in South American operations surpassed that of North America for the first time.
“South America, Asia Pacific and the Middle East remain the Group’s strongest performing markets, with operations in South America enjoying an exceptional performance, largely driven by the economic success of Brazil. The geographies outside the US and Europe now generate 33% of Datatec’s revenues and 40% of the group’s gross profits, which serves to validate Datatec’s decision to diversify its operations beyond its predominantly US and European origins some years ago,” it said.
Trading conditions in Europe were subdued, with no real growth, but in-line with expectations given the on-going economic turmoil in the Eurozone, Datatec stated, adding that the UK in particular remained difficult, impacted by the weak economic environment.
Looking ahead, Montanana, said: “We remain cautious about the near term. While Europe looks likely to remain challenging, we expect trading to improve in the US and a continued strong performance from our businesses in the rest of the world.”
Growth partnership firm, Frost & Sullivan, said that overall, Datatec’s long-term future outlook remains strongly positive as it expands into fast-growing and more profitable territories, and continues to consolidate its position in key mature markets.
“In South Africa, Datatec has been intently looking at exploiting opportunities that would allow it to improve its offerings as well as expand into the rest of the continent. Pursuant to the group’s acquisition of Biodata in 2010, Datatec went onto acquire Sentronics, a value-added IT distributor, in December 2011,” stated Frost & Sullivan’s ICT Industry Analyst, Ishe Zingoni.
“With the focus in Africa now shifting from infrastructure development to IT-related services, unprecedented growth in IT markets is beckoning and Datatec is already positioning itself to benefit from this trend,” the firm concluded.
In afternoon trade on the JSE on Wednesday, shares in Datatec were up a fraction (6 cents) to R45.06.
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