Datatec CEO Jens Montanana
Photo by: Duane Daws
International information and communications technology group Datatec expects to report revenues in excess of $6-billion and underlying earnings a share of more than $0.40 for the financial year ending February 28, 2015.
In an interim management statement for September 1 to December 31, 2014, published on Thursday, the group outlined that the revenue growth would largely be driven by an improved performance by its Westcon subsidiary; a small improvement in the operating margins of Westcon and of its Logicalis subsidiary; and an effective group tax rate of about 36%.
Westcon was expected to contribute about 75% and Logicalis about 24% of total group revenue for the financial year.
Datatec, led by CEO Jens Montanana, meanwhile, pointed out that an economic recovery was under way in the US but that economic conditions in Europe and emerging markets remained mixed, with increased capital and currency market volatility.
In the three months ended December, Westcon continued with a strong recovery, especially in North America with significant year-on-year growth in revenues. The global enterprise resource planning (ERP) transition was progressing well with new implementations in Singapore and Australia largely completed.
“The last few months have been strong across all divisions with North and South America, in particular, delivering robust performance. The Westcon turnaround of the first half [of the year] has continued up to December and its ERP roll-out is now well on track,” said Montanana.
Westcon’s revenue for the ten months ended December 31 was more than 20% higher than that reported for the ten months ended December 31, 2013. In North America, revenues were over 40% higher than in the prior comparable period.
A slight reduction in gross margins, driven by competitive increases in market share, was offset by cost efficiencies resulting in improved operating margins.
Montanana further pointed out that Logicalis’ trading had improved in the second half of the year as expected.
Logicalis’ revenue for the ten months to December 31 was in line with the comparative 2013 period. Gross margins continued to improve owing to favourable product mix and an increase in the contribution from annuity services revenue.
Logicalis had increased its shareholding in Latin American subsidiary Promon-Logicalis Latin America Limited (PLLAL) to 65%. In the six months to August 31, 2014, PLLAL had contributed more than half of Logicalis’ earnings before interest, taxes, depreciation and amortisation, before central costs.
Datatec believed the business had a good market share position, strong margins, an accomplished management team and excellent prospects.
Meanwhile, trading in Datatec’s Consulting Services division in the three months to December 31, had improved in comparison with the first half of the year. Revenues were down slightly on the comparative period owing to a weaker pound, in which a majority of the billing was transacted.