International information and communication technology solutions and services group Datatec on Wednesday reported a marginal decline in profit for the six months ended August 31 to $38.2-million, compared with a profit of $39.69-million in the prior corresponding period.

Underlying earnings per share (EPS) declined from $0.19 to $0.18, while headline earnings a share, at $0.16, were also lower than the $0.18 of the prior corresponding period.

Datatec CEO Jens Montanana stated that the decline in earnings was owing to higher corporate central costs driven by foreign exchange losses and a higher effective tax rate, which masked an otherwise strong recovery by the group’s Westcon subsidiary.

Group revenue for the six months under review was up 8% year-on-year to $3-billion, reflecting a 14.3% increase in revenue from Westcon, which was partially offset by a 6.9% decline in Logicalis revenue.

Gross profit increased 7.9% to $446.2-million, while operating costs were up 9.8% year-on-year to $356.1-million.

The company also maintained its gross margin at 15% during the period.

“We have delivered revenue growth and margin improvements in mixed trading
conditions across the group,” Montanana commented.

Datatec stated that Westcon had a strong first half, as revenues increased 14.3% to $2.2-billion, up from $2-billion previously, with increases across all geographic regions. Of particular interest was the revenue growth in North America where sales increased 26.8%.

The subisidiary’s earnings before interest, taxes, depreciation and amortisation (Ebitda) also increased 22% to $55.7-million, while operating profit, at $42.9-million, was 22.6% higher.

Montanana noted that while Westcon’s operating costs for the period were high, having increased 14.3% to $201.8-million, the division’s short-term focus remained on increasing revenues.

Westcon’s solid performance was expected to continue into the second half of the 2015 financial year.

Meanwhile, Logicalis’ revenue for the six-month period, at $714.4-million, was lower than the $767.3-million achieved in the prior corresponding period, owing to reduced product sales, which were down 13.1% year-on-year, mainly in Brazil where revenues were down 21.7% year-on-year.

Montanana, however, said the drop in revenue had been expected in light of the 2014 FIFA World Cup tournament, which took place in Brazil.

However, revenues in Europe, the Southern Cone of South America, Andina and Asia Pacific showed encouraging growth, while North America revenues declined by 4.8%.

Logicalis was expecting sequential and comparative improvement in the second half of the 2015 financial year.

Meanwhile, Datatec’s consulting services division’s revenue declined from $37.1-million in the first half of the 2014 financial year to $27.8-million in the period under review.

Montanana further pointed out that Datatec had maintained the group’s dividend and was making no change to the full year forecast of revenues above $6-billion and underlying EPS of more than $0.40.