News Column

Datatec Says Second Quarter Performance "Satisfactory"

July 17, 2014

Alice Attwood

LONDON (Alliance News) - Datatec Ltd said Thursday that it delivered a "satisfactory" performance in the second quarter as overall group revenues rose and its Westcon division continued to improve after experiencing operating issues in the previous financial year.

The ICT group said in an interim management statement covering the period from March 1 to June 30, 2014 that while its Westcon business - which generates 72% of its revenues - is seeing an improvement in margins, its Logicalis arm is experiencing a slow-down in trading, most of which was anticipated as part of the FIFA World Cup in Brazil.

Westcon achieve revenues growth of 11% during the period, with all geographical markets apart from Asia Pacific reporting growth. North America revenues were 17% higher on the comparative.

"Trading conditions across the group remain varied," said Chief Executive Officer Jens Montanana. "However, our strategy of developing a global footprint and the diversification of our business streams, continues to provide resilience and sustainable growth for the Group."

While the Logicalis business has experienced a slow-down in trading the company said that it remains confident, based on the significant backlog of business, that trading will recover in the second-half. Revenue for the period was down 8%. The company said that the FIFA World Cup has resulted in telecommunications and service providers suspending installation activities on their networks.

Logicalis' sales backlog indicates that business should return to expected levels but this effect will skew the division's results more towards the second-half of 2015.

In May the company forecast revenues above USD6 billion for the financial year to February 28, 2015, based on the assumptions that revenue growth will be largely driven by an improved performance at Westcon; Westcon's revenues will constitute approximately 72% of the total revenue mix and Logicalis' revenues 27%; a small improvement in operating margins at Westcon and Logicalis; an effective Group tax rate of 34%.

The slow-down at Logicalis' Brazil unit is expected to impact group earnings at the half-year reporting stage, said the company. However, based on current exchange rates, market conditions and the increased backlog at Logicalis, the company said its forecast for the full-year 2015 remains unchanged.

The company expects to release its half-year results on October 15, 2014.

Shares in Datatec were trading 6.78% higher at 315.00 pence Thursday morning.

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Source: Alliance News

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