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Johannesburg - A Brazilian acquisition, tight control over expenses and a key agreement may help boost the performance of ICT group Datatec.
The company on Thursday reported a rise in revenue to $4.2bn from $4bn in 2008 for the year to end-February. However, earning before interest, tax, depreciation and amortisation (Ebitda) declined from $151m to $126m.
CE Jens Montanana on Thursday chose to focus on positive signals, pointing towards the solid performance of Logicalis, the group's solutions division. Logicalis acquired Brazillian network integration business Promon Tecnologia (Promon) in May 2008.
"We achieved a particularly strong performance in Logicalis, where all regions contributed strongly, breaking through $1bn revenue and 5% Ebitda margin," Montanana said.
Analysts agreed that the acquisition was a saving grace. Coronation Fund Managers' Jason Kombo said the move proved to be "brilliant", saying if it had not been for the purchase the results would have been "horrific".
"Brazil is an emerging market and over time we'll continue to see strong growth," he said.
Frost & Sullivan's ICT analyst Spiwe Chireka agreed. "The emerging markets businesses will be the key driver for any growth over the next year. Continued focus on services in troubled markets will also be important."
Datatec's distribution division, Westcon, was designated Cisco's first global distributor in April. Cisko had already contributed 54% of Westcon's revenue during the reporting period.
Chireka said the agreement will be a key plus for the group. "Westcon is the first Cisco multinational distributor to secure an agreement of this type and breadth. In addition to increasing Datatec's geographical coverage, it helps the company to serve its multinational clients efficiently."
Montanana said Datatec will continue to focus on cost reduction.
"There is scope to further reduce costs if conditions do not improve," he said. "We have continued to reduce costs in the first half of the current year."
Montanana said the group has not seen any further deterioration in its performance since February. "Trading has remained consistent with the latter part of the 2009 financial year," he said.
In his assessment, Kombo said that Datatec's future performance is difficult to call. "I don't know whether the company has hit the bottom, but I hope it goes up from here."
- Fin24.com