Datatec has posted strong results for the six months ended 31 August 2008, with revenue of $2,3-billion up 18% from last year's $1,9-billion.
It also announced operating profit of $54,3-million, up 12% from $48,5-million in 2007.
Cash generated from operations stands at $66-million compared to last year's $3-million.
The diversity of group and significant international scale has helped deliver continued growth for the group, according to a statement. More than 40% of EBITDA now derived from integration, services and consulting business streams.
During the period under reveiw, the group acquired Promon in Brazil, which helps to improves its geographic mix. It also established a presence in India.
Jens Montanana, chief executive of Datatec, commens: "Despite deteriorating macro-economic conditions, the group has delivered a strong first half performance with further improvements in revenues, profitability and cash flow.
"Our geographic diversity, global presence and improving mix of business are helping to mitigate the impact of the current economic climate. In all areas of our business and in each of our divisions we have been able to mitigate slower growth in some markets with faster growth in others. Emerging and developing markets have proved resilient with higher contributions from South America, the Middle East and Asia-Pac.
"We are particularly pleased with the financial performance of Logicalis, where all regions contributed with increases in profits and margins. The strategically
important acquisition of Promon in South America earlier this year, and the pre-emptive action taken last year to restructure the US operations, have been major
factors in Logicalis` notable performance over this period.
"The group has become more weighted to the cash generative businesses of integration services and consulting activities which now account for over 40% of
the group EBITDA. This change, together with tight cash management across the group has resulted in a substantial improvement in operational cash flow during the first half of the year.
"The board currently expects that the second half earnings per share, headline earnings per share and underlying earnings per share will be similar to or exceed that of the first half."
Analyst Frost & Sullivan says Datatec's interim results show the group's ability to produce good growth even in a difficult economic environment.
Due to the group's geographic and business diversity, Frost & Sullivan anticipates that Datatec will continue to grow even through the current global crisis.
While Datatec's revenue generated in the US may well shrink due to the current economic situation, Frost & Sullivan anticipates that the group's broad presence in emerging markets will help to shield it from whatever drops in performance there may be in the developed markets of Europe and America.
"This is not to say that Africa and other emerging markets are immune to global developments, but because they are in an accelerated high growth phase, demand is still going to be higher," says Frost & Sullivan ICT analyst Spiwe Chireka. "The company's move to Latin America is expected to contribute significantly to the Logicalis operations. The company is big with a wide footprint in Latin America and therefore we would not expect anything but stellar performance from that area for the group."
While Chireka notes that profitability in a number of emerging markets may have been relatively low for Datatec, she believes that this will not be a long-term problem. She is certain that the risk the group took in going into these regions is going to pay off as most developed markets now face a downturn in their economies.
Chireka adds that the group is continually looking for new opportunities and there are good prospects for growth in a number of areas.
"Expansion into India, which is one of the fastest growing markets in ICT, through the acquisition of Inflow Technologies is a sure plus," she says. "Furthermore, the client list that Datatec has inherited from this acquisition is most impressive. Inflow has alliances with 22 global technology vendors including CheckPoint, Nokia, McAfee Ironport, Websense, Radware, NetApp and Quantum. This could also be the starting point of a rapid expansion into Asia Pacific."