JSE-listed Datatec has paid its maiden dividend of seven US cents after meeting earnings expectations in the first half of the year.
The company yesterday reported results for the six months to June and says it is on track to meet its full-year guidance of revenue of about $5 billion. The company said revenue gained 14%, to $2.44 billion, as it benefited from being geographically diverse.
Earnings before interest, tax, depreciation and amortisation grew 46%, to $85.4 million, while pre-tax profit doubled, it said. Underlying earnings per share rose 38%, to 21.8c a share.
CEO Jens Montanana says “despite the difficult economic conditions around the world, we have been able to grow revenues and improve margins in all divisions”.
According to Montanana, the company's gross margin is up “significantly” and the company is benefiting from an “improving business mix”. “Based on current trading conditions and exchange rates, our forecast for the full-year remains unchanged.”
Datatec declared its first interim dividend, which will result in a total of $125 million having been paid to shareholders since 2006.
Spreading risk
CFO Ivan Dittrich says the company is benefiting from its global diversification and its revenue is now equally split between the US, Europe and the rest of its global operations, which are in emerging markets such as South America and Asia.
Datatec was founded in 1986 and employs more than 5 000 people worldwide with operations in more than 40 countries. It has three operating entities: Westcon, Logicalis and a consulting arm comprising Analysys Mason and Intact.
Dittrich says the company will continue to seek bolt-on acquisitions to further diversify its product range and geographical reach. He says it is likely that any deals will be small, and will not exceed 10% of Datatec's revenue in any one year.
During the first half of the year, Datatec spent $48.9 million on acquisitions.
In April, Logicalis UK acquired Inca Software, an IBM Cognos partner in the UK, which was followed in July by Logicalis US's purchase of Netarx, a Cisco Gold partner and provider of managed services, data centre and collaborative IT solutions to customers in the mid-west US.
In August, Westcon bought entrada Kommunikations, a German-based, value added distributor of IT security products.
Dittrich says the company now earns 39% of its gross profit from outside the US and Europe, up from only 10% six years' ago. He says the geographical diversification is a “strong defence” if the world goes into another recession.
Towards the end of 2008, the global economy was plunged into the worst economic crisis since the Great Depression. It mainly affected developed economies such as the US and Europe.
Dittrich says the company is “cautiously optimistic” about the future due to the current economic conditions, but so far is on track to meet its full-year guidance of revenue of about $5 billion.
Datatec's second half is traditionally stronger than its first six months, adds Dittrich.
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