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Mixed interim results for Datatec

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Datatec has published in interim management statement, detailing revenue growth of 1,8% to $5,1-billion for the period from 1 March 2015 to 31 December 2015.
As an international group with operations in over 60 countries, Datatec continues to benefit from its diverse geographic portfolio. The significant strengthening of the US dollar and mixed global economic conditions have reduced the contribution of emerging markets operations to group results. However, growth in the US and Europe has been resilient compared to the 10 months ended 31 December 2014.
Group gross margins were 13,3% over the period (compared to 13,8% in the previous year), up from 13,1% in H1 FY16.
Growth in underlying operating profit continues to be impacted by translation to US dollar as the reporting currency, the costs of on-going restructuring initiatives and foreign exchange losses, particularly in Angola.
Group EBITDA (excluding foreign exchange) is expected to show a modest sequential improvement in H2 FY16 compared to H1 FY16, as indicated in the interim results. The board expects to maintain the full year dividend in line with previous years.
Jens Montanana, CEO of Datatec, comments: “The slowdown in emerging markets has been challenging, however the diversification and quality of our geographic portfolio, coupled with our strong industry position, enables us to weather these market conditions.
“Westcon and Logicalis both continue to make good progress in their initiatives to improve operating efficiency and adapt to market changes.”
Westcon’s revenues for the period were $4,2-billion, 3,1% higher than for the comparable period. Gross margins in the period were 10,1% compared to 10,3%.
In Angola, remittances to foreign creditors are limited and the depreciation of the Kwanza has continued. As a consequence, foreign exchange losses of $16.9 million were incurred in the period of which $12,5-million is unrealised and $4,4-million realised. The management team has taken a series of actions to control the exposure.
Westcon has instituted cost control initiatives aimed at improving operating profitability in many areas of the business in coming years. In particular, the restructuring and business process outsourcing (BPO) transformation of Westcon Europe, Middle East and Africa (EMEA) that commenced in October 2015 is running successfully and is expected to deliver considerable improvements in operational efficiency.
Logicalis’ revenues for the period were $1,3-billion, 1,9% lower than the comparable period, mainly as a result of the strengthening US dollar and lower contribution from emerging markets. Gross margins improved during H2 FY16 having been less affected by the volume transactions in the US noted in H1 FY16.
The weakness of the Brazilian Real in particular and the reorganisation of Logicalis UK impacted operating profits.
On 1 December 2015, Logicalis acquired Thomas Duryea Consulting, a provider of Data Centre, Cloud and Microsoft solutions and services with operations in Melbourne and Sydney.
The consulting division has recovered significantly in H2 FY16, converting the small EBITDA loss of H1 FY16 into an EBITDA profit for the period.