Datacentrix reports 30% loss in profits

JSE-listed IT company, Datacentrix, has reported a 30% loss in operating profit at R48.5 million for the six months ended August 2012, down from R69.6 million, previously.

However, the company increased its revenue to R976.7 million, up 7% from R912.6 million for the same period in 2011. Earnings before interest, taxation, depreciation and amortisation were at R57.3 million.

Headline earnings per share decreased by 28% to 19.2 cents, from 26.8 cents previously.

Despite the loss, an interim gross cash dividend was declared of 11.25 cents per share, which is payable to all shareholders.

Datacentrix is a South African-based, Level 2 (AAA) B-BBEE company that provides information and technology services to the country’s corporate and public sectors.

It’s main divisions operate infrastructure, managed services and business solutions.

Revenue in Datacentrix’s infrastructure division showed marginal growth, and earnings were impacted by competitive market forces, it reported. Revenue in the commercial segment of the market showed growth, but with tighter margins.

“The Group is experiencing continued decline in public sector revenue with little prospect for an upturn in the fiscal year,” Datacentrix said. “Sizeable tenders have been submitted in the public sector. The revenue and profitability in this division is primarily from the private sector.”

Datacentrix said that it will continue to invest in the infrastructure division, particularly in technical capabilities. However, the company noted that revenue coming from current investments in the division currently lag on the money invested.

Datacentrix’ managed services division – which includes Managed Print Services (MPS), Outsourcing, Resourcing and Projects business units – achieved a 19% revenue growth for the six months, and contributed 40% to group earnings.

The business solutions division – which comprises the Enterprise Resource Planning (ERP), Business Intelligence (BI) and Enterprise Content Management (ECM) business units – achieved revenue growth of 8%.

“Earnings in the ECM segment are coming under margin pressure as new entrants entered this market,” Datacentrix said.

Looking ahead, the group said that it believes its current strategy and investment portfolio puts it in a good position for growth, particularly in the private sector. It added, however, that its operations could benefit from targeted acquisitions.

In morning trade on the JSE, Datacentrix’s shares were down 4.26% to R4.50, having lost 20 cents on the local bourse.

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Datacentrix reports 30% loss in profits