In the months ahead, JSE- and LSE-listed Datatec plans to capitalise on the momentum in the information technology (IT) industry by investing in its cybersecurity and data analytics capabilities.

Its Westcon subsidiary’s nearly completed enterprise resource planning (ERP) and business process outsourcing (BPO) modernisation initiative is also expected to contribute to an improvement in Datatec’s growth prospects and profitability going forward.

Datatec CE Jens Montanana highlighted in a teleconference on Wednesday that tough international trading conditions persisted during the six months to August 31, with the strong dollar negatively impacting its earnings from emerging markets, particularly from Latin America and Africa.

He further conceded that Westcon’s modernisation and transformation initiative was taking longer and costing more than anticipated.

The modernisation project will be completed by June 2017 and will have taken just less than five years. However, the new ERP and BPO systems will help Westcon improve scalability, flexibility and control in emerging markets.

“The international macroeconomic environment has been challenging and global growth is not yet synchronised, with many countries experiencing fiscal difficulties. However, conditions in many markets appear to be stabilising and we expect the dollar to change little over the next half-year.”

Datatec expects its performance and liquidity to result in an improved full financial year, owing to a reduction in credit payable during the second half of the year.

The company’s revenue for the six months ended August 31, decreased by 7.6% year-on-year to $3.04-billion. However, Datatec managed to improve its gross margins to 13.8% from 13.1% in the six months to August 31, 2015.

Earnings before interest, taxes, depreciation and amortisation fell to $68.9-million, from $80.6-million in last year’s interim period, and were impacted on by restructuring costs and lower profitability at its Latin American operations.

“We do not see further deterioration in emerging markets and expect a sequentially and comparatively better second half and full-year.”

The board declared an interim dividend of $0.04 a share, down from $0.08 a share in last year’s interim period.

Datatec’s Logicalis subsidiary acquired Spanish corporate performance and information management company Lantares for $50-million during the period under review.

Montanana noted that Datatec was not anticipating further merger and acquisition activity during the remainder of the financial year, but would react with discipline should any good opportunities be recognised.

The firm’s stable balance sheet and the reduction in credit payable for the rest of the financial year were also expected to contribute to a much better position for the company at year-end.

“Improved confidence in emerging markets is expected to underpin a slow recovery in these regions. Technology innovation in the sectors in which the group operates remains high. The migration to cloud-based infrastructure delivery is a trend that will require increased managed services and creates demand for networking, security and unified communications solutions, all of which are core activities for Datatec,” said Montanana.